Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — PRICES AND CONSUMER PROTECTION

Prices

Mr. David Price: asked the Secretary of State for Prices and Consumer Protection what has been the year-on-year rate of inflation up to April 1977 and May 1977.

Mr. Marten: asked the Secretary of State for Prices and Consumer Protection by what percentage prices have risen in the last 12 months.

Mr. Durant: asked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in the retail price index over the last six months, excluding seasonal foods.

Mr. Canavan: asked the Secretary of State for Prices and Consumer Protection what is the latest rise in the retail price index.

The Secretary of State for Prices and Consumer Protection (Mr. Roy Hattersley): The year-on-year increase in the retail price index was 17·5 per cent. in April and 17·1 per cent. in May. This improvement results from the May increase of 0·8 per cent., less than one-third of the increase registered the previous month and the smallest monthly addition to the RPI for almost a year. Over the six months to May the RPI, excluding seasonal foods, has increased by 9·5 per cent.

Mr. Price: I welcome the 0·4 per cent. reduction between April and May, but does the right hon. Gentleman acknowledge that an increase of 17·1 per cent. for

the last year means that the cost of living has doubled in just over four years? Is that not a punishing rate of inflation? Will he also acknowledge that until we bring the inflation rate down to about 3 per cent. the situation will not be tolerable?

Mr. Hattersley: I agree that what has happened on inflation in the recent past is a record that needs substantial improvement. It is easier to describe what has happened in the past than to predict or to make sure that something better may happen in the future. I believe that something better will happen in the future because of the partnership between the unions and the Government. We will stay in office until we bring that situation about.

Mr. Marten: I recognise that the Government expect inflation from last November to next November to rise by no more than 14 per cent. If there is a significant rise over the 14 per cent. figure before next November, will the right hon. Gentleman think it right to press for an adjustment in retirement pensions and related benefits?

Mr. Hattersley: Part of the hon. Gentleman's supplementary question is not a matter for me, and the part which is a matter for me is wholly hypothetical. Therefore, for two reasons I should not answer it.

Mr. Canavan: In view of the justifiable calls for stricter price controls by the TUC and the National Consumer Council, will my right hon. Friend condemn the impertinence of the Common Market Agriculture Commissioner, Mr. Gundelach, who is claiming that British Ministers are breaking the law by speaking out against the common agricultural policy—a policy which has been responsible for many of the food price increases, which can only be described as criminal?

Mr. Hattersley: The correspondence between Commissioner Gundelach and my right hon. Friend the Minister of Agriculture must be a matter for my right hon. Friend. On the concept of selective price freezes, I have no doubt that in future there needs to be a Government power to enable some prices to be frozen. Many of us will be sitting here tomorrow and probably until the day


after to make sure that that power is obtained.

Mr. McCrindle: As the National Consumer Council has recommended an upper limit of 9 per cent. on price increases, will the right hon. Gentleman say what action he will take if this leads to the erosion of profit margins or to their elimination so that unemployment will increase still further?

Mr. Hattersley: I do not answer for the National Consumer Council, which expresses the views of the consumer, but I have a great deal of sympathy for its objectives as expressed in a draft paper last week. My only reservation is that a general and arbitrary price freeze could do the economy substantial damage. A selective price freeze is an advantage. That is why we are piloting a Bill that will bring about a selective freeze.

Mr. Atkinson: Does my right hon. Friend agree that the rate of inflation which he envisages will not happen of its own volition and that there will have to be interventionist policies by the Government? Will he stand by his statement last week that the £ sterling should be allowed to rise to its rightful level? Will he also stand by his statement that it is necessary for us to have a price strategy for the public sector, particularly for the energy industry?

Mr. Hattersley: Of course I stand by the speech I made last week, but my hon. Friend will understand that some parts of that speech were seeking to draw the attention of the wider public to the fact that decisions on inflation are difficult to take because they are sometimes in conflict with other economic objectives. I tried last week to set out the alternatives. We look forward to hearing from the House, the country and the party about the rival claims on economic resources.

Mr. Giles Shaw: Will the right hon. Gentleman go further than to express the hope that inflation will come down? Bearing in mind that it is almost midsummer and that we have been promised that inflation would be down to single figures, has the right hon. Gentleman had a midsummer dream about the time at which we might expect a drop to single-figure inflation?

Mr. Hattersley: I stand by the forecasts which I made during the last nine

months. During the late summer and autumn there will be reductions in the year-on-year rate, and I believe that we shall be down to single-figure inflation as a real prospect in the second quarter of 1978.

Price Commission

Mr. Shersby: asked the Secretary of State for Prices and Consumer Protection whether he will report to the House on the progress made in the appointment of the new Price Commission.

Mr. Hattersley: Subject to the Price Commission Bill becoming law, I propose to appoint Mr. Charles Williams, at present a managing director of Baring Brothers, as full-time Chairman of the Price Commission. There will be three part-time deputy-chairmen. I propose to appoint Dr. Gordon Hobday, Chairman of Boots, Mr. John Hughes, Vice-Principal of Ruskin College, Oxford, and Mr. Seamus Sweetman, Vice-Chairman of Unilever. I shall announce names of the other members of the new Commission as soon as possible.

Mr. Shersby: Is the Secretary of State aware that the House is grateful to him for reporting today on the progress of appointment of Commissioners and that the names that he has announced will be widely welcomed in all parts of the House and the country?

Mr. Hattersley: I am grateful. I have said from the beginning that the Price Commission Bill and the Commission need the respect of industry and a policy which is well and appropriately applied by people who believe in it. I believe that both the chairman and the deputy-chairmen will fulfil that criteria.

Mr. Skinner: Does my right hon. Friend recall that last year there were seasonal variations in two quarters of the year when price increases were reasonably favourable? Will he give power to the new Commission to give central directions to freeze prices on a wide range of goods? Does he not agree that that would be electorally sensible, that it would cause the Opposition to squeal blue murder and that it could also result in the survival of the Labour Government?

Mr. Hattersley: My hon. Friend will discover, once he has survived tomorrow


night, that the Price Commission Bill includes substantial price freeze powers over increased prices notified to the Commission and which the Commission believes ought not to be allowed and ought to be frozen. If my hon. Friend wants opposition from the Conservative Party, he is likely to get it for most of tomorrow evening and possibly the day after.

Mr. Giles Shaw: What will be the period of the chairman's contract and his salary?

Mr. Hattersley: His salary will be £18,000 a year.

Mr. Fell: Full-time?

Mr. Hattersley: Yes, he will be full-time. I am not sure whether it is appropriate to describe his relationship with the Government as a contract, but we have told him that we expect and hope that he will serve for three years.

Profit Safeguard Regulations

Mr. Giles Shaw: asked the Secretary of State for Prices and Consumer Protection whether he will make a statement on the proposals he has made with respect to the profit safeguard regulations under Clause 9 of the Price Commission Bill.

The Minister of State, Department of Prices and Consumer Protection (Mr. John Fraser): On 15th June my right hon. Friend published a consultative document setting out proposals for safeguard regulations under Clause 9 of the Price Commission Bill. Hon. Members will have an opportunity to discuss the proposals during Report stage and Third Reading of the Bill this week.

Mr. Shaw: I thank the Minister for that statement. Is he aware that the estimates of the CBI and of other bodies show that the safeguard levels are substantially worse than those which previously obtained? Why have the Government made the changes in that way and ignored all the consultations on the matter?

Mr. Fraser: The consultations have not been ignored and we have taken full account of the representations that have been made by the CBI and the Retail Consortium. As for the difference in the safeguards, the Price Code safeguards have served a different purpose. They

have protected the generality of industry from overall price control which otherwise would have operated automatically. Under the new investigatory powers, there is no such threat of automatic and general erosion of margins. It is there that the difference lies.

Mr. Mike Thomas: Is my hon. Friend aware that it would be wrong for us to make reference to the Price Commission Bill and to the Price Commission without this side of the House welcoming the appointment of Charles Williams, who shares the Government's view on intervention in industry and who has wide experience? He will be welcomed on this side of the House as well as by those on other Benches.

Mr. Fraser: I am grateful for my hon. Friend's support.

Mr. Molloy: Is my hon. Friend aware that the only interest that the CBI seems to have is that there should be no control over profits but considerable control over wages? If he has a chance to talk with the CBI about its representations, will he ask the CBI to play the game and to see what influence it could have by controlling prices as avidly as it wishes to see wages controlled?

Mr. Fraser: I am sure that the CBI and the whole country have interest in seeing price restraint. The CBI would do great damage if it saw safeguards as being a profit norm. The CBI ought not to try to undermine confidence in British industry. There is a great danger if the trapeze artist thinks about the safety net all the time, because he then starts to get dizzy.

Trade and Commercial Practices

Mr. McCrindle: asked the Secretary of State for Prices and Consumer Protection if he plans to introduce legislation giving general powers to regulate trade and commercial practices.

Mr. John Fraser: Not in the immediate future. But I do think that there is a case for taking general enabling powers to require registration or similar arrangements to cover individual sectors where this seems necessary to protect the interests of consumers.

Mr. McCrindle: Does that mean that the Government will seek powers to regulate trade and commercial practices


generally under one Act of Parliament rather than, as recently, by introducing separate Bills? For example, there have been the Farriers (Registration) (Amendment) Bill and the Insurance Brokers (Registration) Bill—although one of those was a Private Member's Bill. Does not the hon. Gentleman feel that this is a departure from the Government's previous policy and that it indicates dissatisfaction with the Fair Trading Act?

Mr. Fraser: In a way it does, but it also recognises that the powers of the Fair Trading Act to deal with a number of commercial practices are not as satisfactory as they were intended to be. I have put forward only a tentative proposal upon which I invite discussion, but there are a good many professions and trades that would prefer to have a regulatory system, to protect the vast majority of reputable traders, introduced rapidly.

Prices

Mr. Lawrence: asked the Secretary of State for Prices and Consumer Protection what is the increase in the retail price index, excluding seasonal food, over the last three months, expressed at an annual rate.

Mr. Wakeham: asked the Secretary of State for Prices and Consumer Protection what is the current rate of inflation.

Mr. Rathbone: asked the Secretary of State for Prices and Consumer Protection what is the latest year-on-year percentage increase in the retail price index, all items.

Mr. Hattersley: The current rate of inflation is, as I stated in my reply to the hon. Members for Eastleigh (Mr. Price), Banbury (Mr. Marten), Reading, North (Mr. Durant) and West Stirlingshire (Mr. Canavan), 17·1 per cent. For what it is worth, the increase in the RPI, excluding seasonal food, over the last three months expressed at an annual rate is 19·9 per cent. However, I do not regard the three-monthly annualised figure as a statistically valid indicator of trends.

Mr. Lawrence: Will the right hon. Gentleman make clear to the House, and especially to his hon. Friends below the

Gangway, that the appalling increase in the retail price index during the past three months has not been a consequence of Britain's membership of the EEC?

Mr. Hattersley: I tried to make that point clear not only to the House but to a wider audience a week ago. The effect of the common agricultural policy, about which there have been many legitimate criticisms, is negligible compared with other factors affecting the increase in the cost of living. Its effect has been about 05 per cent.

Mr. Heffer: Rubbish!

Mr. Hattersley: I hope that the hon. Gentleman will not talk about annualised figures in that florid fashion. The annualised rate, based on May figures, shows that inflation is now running at less than 10 per cent., but I do not believe that that is a statistically valid thing to deduce.

Mr. Rathbone: Does the right hon. Gentleman realise that the figures, annualised or financialised, are in horrible contrast to the expressed intentions of the Government? Will he explain—as he has said that foreign confidence in Britain is very much dependent upon certain aspects of the Government's war on inflation—how that can be squared with the requirements of the Price Commission Bill for permanent powers of investigation, intervention and price control?

Mr. Hattersley: I must first explain that the figures that I have just announced are in no way in conflict with the Government's previous estimates. The 19·9 per cent. is in conflict with good statistical practice and the other figure of 17·1 per cent. is the sort of figure that we predicted throughout the spring as the level that we expected in the summer. We shall begin to reduce it month by month in the late summer and early autumn.
As for the Price Commission, I have no doubt that it will play a substantial part in bringing inflation under control. The general need to keep inflation under control must be reflected in our national economic policies, but a part of those policies must be an effective Price Commission, and that is something that we shall create.

Mr. Ioan Evans: Does my right hon. Friend agree that the common agricultural policy has had an effect and that so also has the harmonisation of prices in this country with European prices, especially for farm produce? Does he not agree that this has had an effect on the RPI? Does he not realise that working people are now saying that we were promised Common Market wages but that all that we have had has been Common Market prices without the wages to go with them?

Mr. Hattersley: I can give only the statistical facts as calculated in my Department a week ago. Of the 17·5 per cent. inflation over the last year, about 1 per cent. was calculated as being caused by the CAP.

Mr. Heffer: What about the levies?

Mr. Hattersley: Yes, I have heard of the levies.

Mr. Speaker: Order.

Mr. Hattersley: Since that time, as I am sure my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) will be gratified to know, I have thought it necessary to revise that figure. It is not 1 per cent. It is 0·5 per cent.

Wholesale Prices

Mr. Tim Renton: asked the Secretary of State for Prices and Consumer Protection whether he will give the latest year-on-year percentage increase in wholesale prices (all items).

The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): The wholesale output price index has increased by 20¾ per cent. year on year since May 1976, showing no change since April. The wholesale input price index has increased by 19¼ per cent. year on year—a fall from the April figure of 22¼ per cent.

Mr. Renton: As the Minister recognises and admits that the rate of wholesale price inflation is now 20 per cent., can he give us one good reason why the public should believe this desperate and discredited Government when they hold out the mirage that inflation will fall, at some distant date, to single figures?

Mr. Maclennan: I should have thought that the hon. Gentleman would take some

comfort from the fall in the input index which reflects the stability of sterling that has been brought about by Government measures and some stabilisation of world commodity prices. These are reasons for believing that the Government are on target.

Mr. Skinner: Does my hon. Friend agree with the Secretary of State that the Common Market is to blame for hardly any of the price increases? If so, is not his Department really saying that the Government are to blame for all the price increases? Is the Secretary of State also saying that the transitional arrangements arising from Common Market membership have had little or nothing to do with price increases over the past three or four years?

Mr. Maclennan: If I accepted my hon. Friend's extension of the responsibility, I could include him and his hon. Friends in that responsibility because of their support for our measures. This is an illogical approach. There are a number of other Questions on the Order Paper concerning the common agricultural policy.

Mr. Neubert: Does the hon. Gentleman know whether the Secretary of State believes that, given the surplus on the balance of trade over the last three months, it is relatively more important that prices in the shops should be allowed to benefit from the rise in the value of the pound? If so, is the right hon. Gentleman urging that view on his Cabinet colleagues?

Mr. Meclennan: It is not customary in this House to discuss the level of sterling.

Mr. Marten: Did the extraordinary figure just given by the Secretary of State include a calculation of world food prices which are much lower than those in the Common Market and which could have benefited greatly the British consumer? Is the hon. Gentleman aware that there is a plentiful supply of food in the world at much lower prices than in the Common Market?

Mr. Maclennan: I do not see the relationship between that and the percentage increase in wholesale prices with which I have been dealing. But, of course, the factors to which the hon. Gentleman referred were taken into consideration.

Prices

Mr. Gorst: asked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in the retail price index since February 1974.

Mr. MacGregor: asked the Secretary of State for Prices and Consumer Protection what is the latest annual increase in the retail price index.

Mr. Maclennan: As my right hon. Friend has informed the House, the latest increase in the retail price index is 17·1 per cent. The index has increased by 78·7 per cent. since February 1974.

Mr. Gorst: Is the hon. Gentleman proud, satisfied, disturbed or merely complacent about that reply?

Mr. Maclennan: The Government have made plain the priority they attach to reducing the rate of inflation and have given a firm indication of how that end will be achieved. It is not sensible to be complacent or as extreme as some Opposition Members are about the prospects. If the Government persist in their relationship with the trade unions, whose restraint on wage policy has contributed substantially to the improvement in the situation, we shall succeed in conquering the difficulties that we have been faced with as a result of trends many of which are beyond the Government's control.

Mr. MacGregor: Can the hon. Gentleman say how many of our competitors in OECD countries have rates of inflation exceeding or anywhere approaching the annual figure that he has announced? To what does he attribute the consistent disparity between their levels of inflation and ours? In view of that disparity, does he think that the Government's target is really adequate?

Mr. Maclennan: Part of the difference can be attributed to policies pursued by the previous Government including, for example, subsidising and forcing into deficit the nationalised industries, the results of which are still with us, though I am glad to say that the current trend of nationalised industry price increases is substantially reduced.

Mr. Molloy: Is my hon. Friend aware that many people inside and outside the

House believe that there have been dramatic increases in prices which have hit the housewife hard and do not contribute to the possibility of a third phase of the pay policy? Is he aware that, when the Secretary of State says that he does not believe that the Common Market and the common agricultural policy have had an effect on price increases, this may be the reason why many people believe that his Department is not doing a good job? Will he, therefore, take on board the possibility that the CAP and other activities of the Common Market have contributed to increased prices and also work to make his Department more efficient?

Mr. Maclennan: The prime responsibility for negotiation of the CAP lies with the Ministry of Agriculture, which has been extremely effective in reducing the rate of price increases proposed by the Community to one-quarter of what was originally intended. That is a substantial achievement.

Mr. Heffer: The Secretary of State just said that there had been no increases.

Mr. Maclennan: The Price Commission Bill, which has its Report stage in the House tomorrow, will enable us to freeze prices selectively for up to 12 months and will be a substantial contribution to reassuring the housewives with whom my hon. Friend is so rightly concerned, as are we all.

Mrs. Sally Oppenheim: As the internal purchasing power of the pound has fallen to 55p since the Government came to power, would the hon. Gentleman care to predict how long it will be before it falls to 50p? Does he agree that that would be a highly appropriate date for the Government to go to the country for the "fair test" that the Prime Minister has been talking about?

Mr. Maclennan: I see that the hon. Lady also reads the Daily Express. She will have seen that paper's predictions. I propose not to comment on them but to treat them with the seriousness they deserve.

Nationalised Industry Prices

Mr. Mike Thomas: asked the Secretary of State for Prices and Consumer Protection what representations have been made to him regarding taking powers


to impose a price freeze on nationalised industry prices.

Mr. Wigley: asked the Secretary of State for Prices and Consumer Protection if he will seek powers to impose a price freeze on nationalised industry prices.

Mr. Michael Marshall: asked the Secretary of State for Prices and Consumer Protection if he will seek powers to introduce a price freeze relating to products and services supplied by nationalised industries.

Mr. Hattersley: I have had no recent representations about introducing a general freeze on nationalised industry prices. Powers are not required to impose a freeze, but would be required to compensate the industries for any overall loss.

Mr. Thomas: I do not wish to return to the policies of the Conservative Party, which tried systematically to bankrupt the nationalised industries, but does my right hon. Friend agree that nationalised industry prices are of great importance, particularly to the low paid or those living on pensions or benefits? Would he accept that there is a danger of some of the industries making entirely unacceptable profits for no good reason? Does he accept that restraint on their prices would be a valuable example for the rest of the business community?

Mr. Hattersley: Nationalised industries have to set a good example, and that is why I was anxious that the Price Commission Bill should apply to them just as much as to private enterprise, and it will do so. The nationalised industries are moving towards the viability that was denied them by the previous Government and they can have a much more gradual pattern of price increases when such increases are essential. The industries will be controlled by the same Commission and legislation as private industry. That gives me the opportunity to correct an answer I gave in reply to an earlier question. The new Commission will be chaired by Mr. Williams, but his initial term of contract is two years and not, as I said earlier, three years.

Mr. Neuberf: Does the right hon. Gentleman agree that, with the cost of fuel and light having nearly doubled in the past three years, this is no time to be imposing another tax on North Sea gas?

Is he with the Chairman of the British Gas Corporation or the Secretary of State for Energy on this issue?

Mr. Hattersley: I am with the Government—according to the rules of collective responsibility.

Mr. Atkinson: Will my right hon. Friend again confirm that the new Price Commission will be responsible for intervention in and supervision of the pricing strategies pursued by the nationalised industries? Does he recognise that, if the Government are to realise their ambition to get down to single-figure increases in the retail price index within the time stated by them, there will have to be some drastic changes in what are now envisaged as price rises in the whole area of rents, rates and public sector expenditure, as well as nationalised industries, together with other items such as transport which go to make up a significant part of the index? Will he assure the House that the Commission will have the right to intervene in the pricing strategies of all the areas that I have mentioned and will be encouraged to do so?

Mr. Hattersley: My hon. Friend has asked two important questions. I believe that the pattern of increases that we have prescribed and predicted will be achieved according basically to our present economic strategy. There may be some adjustments from time to time, but the basic strategy should remain and, I believe, will remain. I believe that it will produce the prices pattern that I have described.
As for the Price Commission and the nationalised industries, the position is that the Commission will act generally on its own initiative. It will choose the investigations that it wishes to make when it is notified of a price increase. The initiative that is exercised by the Commission will apply to the nationalised industries exactly as it will apply to private enterprise, which I believe is wholly right.

Mr. Gow: Will the right hon. Gentleman accept the congratulations of this side of the House, and no doubt the congratulations, too, of the Managing Director of the International Monetary Fund, for the courage that the Government have shown in insisting that there


should be a sensible economic pricing policy for the nationalised industries?

Mr. Hattersley: I am always prepared to accept congratulations, no matter how bizarre the quarter from which they come.

European Community (Council of Ministers)

Mr. Biffen: asked the Secretary of State for Prices and Consumer Protection what plans he has to attend future meetings of the European Communities Council of Ministers.

Mr. Maclennan: My right hon. Friend has no immediate plans to do so.

Mr. Biffen: Is the hon. Gentleman aware that the proposal to require ice cream to be designated as edible ice is bizarre and fatuous even by the generous standards of the European Commission? Will he indicate by what means he intends that those in Brussels should be made aware of this view?

Mr. Maclennan: The answer to the first part of the hon. Gentleman's question is "Yes". That view has already been made plain to the Commission. I have accompanied my right hon. Friend the Minister of Agriculture, Fisheries and Food to Council meetings of the Agriculture Ministers and there is no doubt in the minds of members of the Council as to where the British Government stand on this issue.

Mr. Marten: As the Minister has attended Council meetings with the Minister of Agriculture, Fisheries and Food, will he explain why the Government agreed to a tax on isoglucose when, in the week before, the House had voted against precisely that thing?

Mr. Maclennan: The package as a whole must be considered, and major changes—most notably the payment by the Community of a subsidy on butter worth 10p per pound—were agreed as a result of the strong representations that were made about the importance of bearing in mind the consumer interest in the price settlement. The isoglucose levy was unwelcome, but it must be judged as part of an overall package.

Mr. Molloy: Will my hon. Friend confirm whether it is in the interests of the policy of detente that the EEC is flogging

mountains of beef and other foodstuffs and lakes of wine to the Soviet Union at knock-down prices at the expense of the British consumer?

Mr. Maclennan: Detente is not a consideration in the minds of Agriculture Ministers attending the Council.

Consumer Protection

Mr. Ioan Evans: asked the Secretary of State for Prices and Consumer protection what further measures are proposed to improve the protection of the consumer.

Mr. John Fraser: Good progress is being made on a number of important measures. For example, the Unfair Contract Terms Bill, sponsored by my hon. Friend the Member for Peterborough (Mr. Ward), is well advanced in its passage through Parliament and the Price Commission Bill is before the House. A number of further measures to protect consumers are under consideration, including a new consumer protection Bill on which I am currently having consultations.

Mr. Evans: As this Parliament may well go on for another year or two years, and as it is unlikely to get controversial legislation through the House in view of the Government's majority, will my hon. Friend and his Department seriously consider bringing forward important consumer protection measures and putting them in the next Queen's Speech so that Parliament may occupy its time dealing with consumer protection matters?

Mr. Fraser: I have already said that I hope that in the next Session there will be a consumer protection Bill dealing mainly with consumer safety. I appreciate that it is felt on both sides of the House and by outside bodies that urgency should be given to dealing with other measures of consumer protection.

Mr. David Price: Does the hon. Gentleman agree that so far the best method that has been found of protecting the consumer is by ensuring that there is genuine competition in each product and service sector, and that the greatest problem is where there is not, for various reasons, genuine competition?

Mr. Fraser: Yes, but we are trying to encourage genuine competition and the


Price Commission Bill, when enacted, will add bite to the competitive edge. As the right hon. Member for Down, South (Mr. Powell) said in the House recently, no market is perfect and most markets are far from perfect. We also need consumer protection measures embodied in legislation.

Mr. John Garrett: Does my hon. Friend agree that a valuable general protection would be afforded to the consumer if there were a rigorous investigation of the retail price mark-ups in the footwear industry, which a recent footwear study report shows to be unacceptably high?

Mr. Fraser: The Price Commission will investigate those prices where notifications are given under the present system. It will be free to select for investigation that sort of sector under the new régime under the Price Commission Bill.

Sir A. Meyer: As it is a fact that Government legislation on employment protection has produced a vast increase in unemployment, and as their legislation on rent controls has produced a vast increase in homelessness, what guarantee is there that legislation on consumer protection will have anything other than the contrary effect?

Mr. Fraser: First, I do not accept the hon. Gentleman's premises based on the legislation that he has mentioned. Secondly, we are usually supported by the mass of consumer organisations and the mass of reputable traders and manufacturers when we bring considered consumer protection legislation before the House.

Mr. Pavitt: Will my hon. Friend give as much attention to the protection of consumer services as the Department gives to goods? Is he aware that the National Car Parks car park at Euston has been giving no information of the amount that the parker will be asked to pay as he or she drives into the car park? If a car is parked for three hours the charge is £1, but if a car is parked for three hours and five minutes the charge is £5. The parker is not made aware of that fact until he or she is about to leave.

Mr. Fraser: The Unfair Contract Terms Bill is one example of the priority

that is being given to consumer protection in the provision of services. That aspect is being given as much priority as the provision of goods and the provision of information about services. It is as much in our minds as is consumer protection against shoddy goods.

Food Subsidies

Mr. Hooley: asked the Secretary of State for Prices and Consumer Protection what assessment his Department has made of the contribution of subsidies towards the stabilisation of prices to the domestic consumer.

Mr. Maclennan: Over the last three years the effect of food subsidies on the cost of living has varied. At their peak early in 1975 food subsidies were estimated to be saving 1·6 points on the retail price index.

Mr. Hooley: Does my hon. Friend agree that the maintenance and even the extension of food subsidies would have a useful stabilising effect on the cost of living and would improve the chances of getting a reasonable incomes policy in the third stage?

Mr. Maclennan: Food subsidies are being maintained, although at a lower level than they were earlier. I have already drawn attention to the particular importance of the butter subsidy.

Mr. Peter Bottomley: Does the hon. Gentleman agree that stabilisation of consumer prices will be effected by the success of the incomer policy? Having made an assessment on the basis of the Question, will he spell out what level of pay increases generally is consistent with a retail price index increase over the next year of 10 per cent., 5 per cent., or 17 per cent.?

Mr. Maclennan: Not without notice. That does not relate directly to the contribution of food subsidies towards stabilising the cost of living.

Mr. Ward: Will my hon. Friend indicate what level of subsidy would have been required of the Government had they tried to protect consumers against increases in food prices since the sterling crisis of last autumn?

Mr. Maclennan: It would have required a level of subsidy quite inconsistent with maintaining confidence in the £ sterling.

Mrs. Sally Oppenheim: How much will food subsidies introduced by the Government have cost in total by the time they have been phased out, and what proportion of the total food subsidy has gone to poorer families?

Mr. Maclennan: As no decision has been taken finally to phase out food subsidies, that answer cannot be given. I can tell the hon. Lady that food subsidies are less regressive than the subsidies that her party when in power gave to the railways.

Commodity Marketing

Mr. Robert Hughes: asked the Secretary of State for Prices and Consumer Protection what plans he has to control the forward marketing in commodities.

Mr. Maclennan: None, Sir. I remain quite satisfied that the existing surveillance arrangements are adequate.

Mr. Hughes: Is my hon. Friend aware of the great increases in the prices of tea and coffee? How far are these the result of genuinely increased costs—[HON. MEMBERS: "The Common Market."] Even I would leave out the Common Market—and how much is due to speculation?

Mr. Maclennan: Yes, I am aware of the concern about tea price increases. There is a Question on the Order Paper about this matter, which is being considered by the Price Commission. The ingredients or the causes of the increase will be and are being carefully analysed by the Price Commission. When it publishes its report, my hon. Friend will be able to read it.

Mr. Tim Renton: Has the Minister made any estimate of the likely cost of the common fund on the basic costs of a number of commodities in this country? If the Department has not yet made such an estimate, will it do so over the coming months while the common fund is under detailed discussion?

Mr. Maclennan: A curious practice seems to be developing of asking ques-

tions about almost anything under the sun whether or not it relates to the Question on the Order Paper, which on this occasion concerns forward marketing in commodities. That is a matter for my right hon. Friend the Secretary of State for Trade.

Price Increase Regulation

Mr. Neubert: asked the Secretary of State for Prices and Consumer Protection whether he will make a statement on his further specific proposals for transitional arrangements under Clause 21 of the Price Commission Bill.

Mr. John Fraser: My right hon. Friend intends that the provisions in the present Price Code which regulate price increases by reference to increases in costs should come to an end by 1st August 1977 or as soon as administratively possible thereafter. My right hon. Friend has therefore tabled an amendment to the transitional provisions set out in Clause 21 of the Price Commission Bill to ensure that this has to be done by 1st October 1977 at the latest.

Mr. Neubert: Does not the Minister feel that he is getting dangerously close to the deadline of 1st October? Does he not realise that we may have a new Government by October? Should he not therefore make his proposals clearer much earlier than that time?

Mr. Fraser: I do not think that we shall have a new Government by that time. The date 1st October is the latest date. Of course, in normal circumstances we would expect to have our proposals ready long before that time.

Fares (London Underground)

Mr. Dodsworth: asked the Secretary of State for Prices and Consumer Protection when he expects to receive the report of the Price Commission on Underground fare increases in Hertfordshire.

Mr. Maclennan: The Price Commission considers applications to increase fares from London Transport Executive against the rules set out in the Price Code and does not report to my right hon. Friend or any other Minister the outcome of that consideration.

Mr. Dodsworth: Will the Minister in future consider the wisdom of matters of this kind being exempt from any veto of investigation? These increases—40 per cent. and 50 per cent. in this case—represent a substantial rise in the cost of living to the individuals concerned. They reflect not only on Hertfordshire but on Essex and Buckinghamshire. Surely this is the kind of matter with which the Department should be intimately concerned.

Mr. Maclennan: My Department is concerned about these matters, as the hon. Gentleman will know from the debate which he initiated on this subject last week, which, I think, answered his question fairly extensively.

Mr. Molloy: Is my hon. Friend aware that almost all Conservative Members want some form of price control on services and goods in their constituencies and no such control in other constituencies? Does he agree that if there were no price control whatsoever we should be running into one of the greatest confrontations ever with organised labour and that that would do no good to this House, the nation or, indeed, Europe as a whole?

Mr. Maclennan: My hon. Friend is right to draw attention to the discrepancies between the views of Conservative Back-Bench Members who call for selective price control when speaking for narrow constituency interests and those of Opposition Front Bench speakers who have opposed the Price Commission Bill, which will enable such powers to be taken. The Opposition must sort out that problem among themselves. They must also recognise that the country is increasingly mystified about their policy on prices.

Tea Prices

Mr. Madden: asked the Secretary of State for Prices and Consumer Protection if he will refer to the Price Commission the increase in the price of tea.

Mr. Gwilym Roberts: asked the Secretary of State for Prices and Consumer Protection if he will refer the price of tea for investigation by the Price Commission.

Mr. Maclennan: My right hon. Friend announced on 30th March 1977 that he

had asked the Price Commission to examine and report on prices, costs and margins in the importation, blending, packaging and distribution of tea, including the causes and effects of movements in world prices of tea. The Price Commission has not yet completed its report.

Mr. Madden: Does my hon. Friend accept that many people, especially the retired, are angry at the way that tea prices have increased? Does he appreciate that they understand that increases in the pay of tea workers in no way account for the increases which have taken place and that their confusion is heightened when the May indices show that the food index increased primarily because of the increased cost of tea, whereas the index for materials purchased, including tea, shows that those prices went down? People believe that there is speculation and that middlemen are having a field day. What will my hon. Friend and his Department do to speed up the inquiry and tackle the problem?

Mr. Maclennan: We are anxious that the inquiry should be completed not only as soon but as authoritatively and thoroughly as possible. It takes time for forward prices to feed through into retail costs. That explains the discrepancy between the figures to which my hon. Friend drew attention and in particular the decline in the London tea auction prices from a peak in March of 270p per kilogram to 180p per kilogram. That latter figure is still more than twice what the figure was in December 1975. These are complex matters. I believe that in such instances it is right to have a thorough report from the Price Commission.

Sir A. Meyer: Is the Minister aware that, despite his statement, there is still a widely held misconception that there is some connection between the Common Market and increases in the prices of tea and coffee? Will he dispel that misconception? Will he also explain why the so-called world price of sugar is at present extremely low whereas, because of commodity agreements, the price that we pay remains static and is slightly rising?

Mr. Maclennan: No one in my hearing today has asserted that the increased price of tea had anything to do with the European Economic Community. Indeed,


my hon. Friend the Member for Aberdeen, North (Mr. Hughes) specifically denied that, and he is entirely right.

Mr. Skinner: Does my hon. Friend appreciate that it is entirely right for a Government who are supposed to be dedicated to the idea of planning and intervention, on occasions of astronomical price increases, for whatever reasons—whether commodity speculation or poor harvests overseas—to intervene and to do something to protect consumers, especially the low paid and those in the pension category? If they could do that for bread to a limited extent, why have they not done it for tea and coffee?

Mr. Maclennan: My hon. Friend has precisely enunciated my philosophy. [Interruption.] It is because the Government accept the force of his view that there should be the power of selective intervention to deal with unacceptable price increases that they have brought forward the Price Commission Bill, which will give that power, but it will do so on the basis of the evidence of lack of justification for a price increase. We are seeking that evidence in referring matters, such as the tea price increase, to the Commission. The new Bill will give us far greater power to act than we possess at present. We are seeking in that way to strengthen our price control policy to protect the less-well-off members of our society.

EUROPEAN COMMUNITY (ECONOMIC MINISTERS)

Mr. Tim Renton: asked the Chan cellor of the Duchy of Lancaster when, in his rôle of economic adviser to Her Majesty's Government, he was last inconsultation with the Economic Ministersof the EEC.

Mr. Wigley: asked the Chancellor of the Duchy of Lancaster when, in his capacity as the Government's chief economic adviser, he next intends to meet his EEC colleagues.

The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): I meet Economic Ministers from the Governments of other EEC countries from time to time. I hope that I shall have the opportunity to meet informally any who

are visiting London for the European Council at the end of this month.

Mr. Renton: What are the right hon. Gentleman's views about the EEC's reported intention to raise large sums of money on its own account in international markets? If the Government remain openly and bitterly divided on the question of continuing EEC membership, to what extent will that damage Britain's chances of sharing in the disbursement of the moneys raised by the EEC?

Mr. Lever: I welcome the constructive achievements of the EEC, including the particular financial one to which the hon. Member referred. My Government are certainly not—[HON. MEMBERS: "My Government?"] The Government of which I have the privilege of being a member are certainly not divided on the question of retaining membership of the European Community. The expressions "bitterly" and "openly" are not apposite to the position of my Government in relation to the EEC. We shall continue as we have done throughout the period of this Government in encouraging all positive achievement that is for the advantage of this country and members of the Community.

Mr. Heffer: At such discussions with the Council of Ministers, what positive plans were brought forward to deal with the question of unemployment in view of the high level of unemployment in the Common Market? Does my right hon. Friend accept that that level is a basic fault of the capitalist system that operates in the Common Market? What plans do he and the Government have to deal with that problem?

Mr. Lever: Unemployment is a world problem. The question that all of us in Europe have to ask ourselves is whether we would be better off in a state of anarchic, unilateral rat-racing than in a co-operative attempt to solve these problems. I welcome my hon. Friend's concern that we should tackle these problems co-operatively as a responsible member of the European Community.

Mr. Biffen: In the right hon. Gentleman's rôle of economic adviser to the Government, does he reflect that as Chancellor of the Duchy of Lancaster he represents a major agricultural, landowning interest? In that capacity, what


advice has he offered the Government about the future of the Milk Marketing Board and the Potato Marketing Board within the European Community?

Mr. Lever: I was aware of the premise on which the hon. Member's question was based, but I had not, I confess, regarded these as areas of my specialist expertise on which to tender advice to the Government.

Mr. Flannery: When my right hon. Friend meets the Economic Ministers of the EEC, will he tell them to proceed cautiously because of the massive groundswell of disillusionment which is spreading throughout Britain? Will he ask them to adjust their policies accordingly or allow us to get out?

Mr. Lever: My hon. Friend refers to a massive groundswell of disillusionment. That comes mainly from those who were never illusioned in the first place.

Mr. Marten: In that case, might I send to the right hon. Gentleman the results of the last few opinion polls, which show that opinion has reversed since the referendum? I turn to the Question on the Order Paper. One of the main aims of the Community surely must be convergence. Since we have joined, there has been nothing but economic divergence. What will be the right hon. Gentleman's advice to the Economic Ministers when he discusses this important question, if the Common Market is to succeed?

Mr. Lever: The hon. Member is right to say that we shall all benefit if we can increase the amount of economic and financial convergence in our activities. I should give the advice that they should learn from the past. It is no good setting unrealistic targets for advance. But I should tell them that they should not despair of advancing in a commonsense, constructive way. I should tell them that one of the advantages that they hope to get from our arrival is that good faith and common sense will be injected more strongly into the forces of the Community by reason of our arrival.

Mr. Hooley: In these discussions, will my right hon. Friend tell his fellow Ministers about the importance of the stabilisation of international commodity

prices and the value of the common fund as a mechanism to achieve this end?

Mr. Lever: I certainly take part in discussions about the way in which we can achieve greater security for the world on commodity prices. This question is being dealt with in many different places such as the United Nations, the CIEC and the Common Market. In so far as my hon. Friend is seeking to relate this matter to the Community, I believe that the Community has a constructive part to play in furthering the world judgments which would be useful in this area.

Mr. Gow: When the Chancellor of the Duchy of Lancaster next meets the EEC Economic Ministers, will he take the opportunity of reaffirming that it is an essential element of the Government's economic strategy that there should be a substantial and continuous reduction in the share of resources required for the public sector?

Mr. Lever: I know of no advantage that would be gained by such a statement.

Mr. Skinner: Does my right hon. Friend appreciate that while it is true to say, as he did, that there are those of us who will never be content while we are inside the Common Market, many millions of other people have changed their minds? Is he aware that there is no better illustration than that of Grimsby, where the people were told that they would benefit most from membership because their port faced Europe?
Will he tell the European Ministers that we are propping up private industry by £10 million a day, whereas before we joined we were spending only £2 million a day on it? Will he tell them that the dole queue has doubled and that inflation is raging at three times the rate it was before we joined? Will he also tell them that we have a trading deficit of £2,000 million a year, which we did not have when we went in? Will he tell them that those of us on these Benches who are campaigning——

Mr. Speaker: Order. That is enough for any man.

Mr. Lever: I readily accept that my hon. Friend the Member for Bolsover (Mr. Skinner) will not be content as long as we remain inside the Common Market.
What is more open to discussion is whether he would be content even if we came out. In the long list of cumulative woe which my hon. Friend has enumerated, he has omitted the recent increase in wet weather and cold as late as mid-June. On a more cheerful note, my hon. Friend has also omitted the striking improvements in the balance of payments which have been occurring recently and the even greater ones which are now in prospect. None of these matters can be attributed exclusively to the Common Market. To those who are complaining, I can only say that all the more optimistic predictions made in relation to the Market have not been statistically justified and that for me the question is whether we would be better off out of the Market in the short or long term or better off in it. I have not the least doubt that we have been much better off in the short term through being in the Market and that our prospects of being better off in the future are immeasurably enhanced because of the new growing European unity cautiously advanced.

GRUNWICK PROCESSING LABORATORIES LIMITED

Mr. Speaker: Before calling the Private Notice Question, I would remind the House of the considered ruling that I gave on Friday last in relation to this dispute. I then said:
Issues which touch on the activities of those against whom criminal charges have been brought, and on the civil action pending between ACAS and the firm, cannot be raised in motions or Questions until the cases have been disposed of."—[Official Report, 17th June 1977; Vol. 933, c. 734.]
In allowing the Private Notice Question, I have sought to balance the right of this House to discuss the issue with my duty to protect those involved in litigation arising from the dispute, whose rights to a fair hearing in the courts might be prejudiced by references to their cases in this House. I therefore ask the House not to trespass upon the matters which I denned last Friday and which I have already quoted as being sub judice.

Mr. Whifelaw: Mr. Whifelaw (by Private Notice) asked the Secretary of State for the Home Department if he will make a statement on the preservation of law and order outside the Grunwick Processing Labora-

tories in view of the great increase in picketing.

The Secretary of State for the Home Department (Mr. Merlyn Rees): I understand and share the concern felt by hon. Members in all parts of the House about the events outside the Grunwick Laboratories. The Commissioner of Police of the Metropolis informs me that his officers are attempting to maintain, in conditions of considerable difficulty, both the rights of peaceful picketing and the freedom of those not prepared to be persuaded by the pickets not to enter and leave the premises.
A number of people have been charged with offences arising out of incidents last week. As the police action in these cases will be before the court it would be wrong for me, as you have reminded me, Mr. Speaker, to make any comment about particular incidents.
Complaints which may have been made about the conduct of police officers during incidents last week are already being investigated in accordance with the new complaints procedure, which includes a review by the independent Police Complaints Board.
It is a matter for concern that certain of those present may latch on to industrial action by a trade union as an excuse for breaches of the law, and particularly for violence against the police. This kind of activity, I know, has no place in responsible trade unionism, and I was glad to note the appeal by Mr. Grantham, General Secretary of APEX, for a reduction in the number of pickets.

Mr. Whitelaw: Does the right hon. Gentleman appreciate that we shall firmly accept and support his statement and that of the Commissioner of Police that it is the duty of the police to uphold the law and to ensure that peaceful picketing does not degenerate into plain intimidation? Will he reaffirm his opposition to violence of any sort and express his full public support for the courageous way in which the police are carrying out their clear duty to the whole nation?

Mr. Rees: The law on peaceful picketing is as it has been for one hundred years and is clearly understood by the trade union movement. Of course I am


opposed to violence and of course I support the police. I support the police whenever they are carrying out their duties. I believe it wrong for a Home Secretary to pick out one case in which he decides to reinforce his support. I support the police on all occasions when they are carrying out their duties, and I would prefer that that was taken as read.

Mr. David Steel: Will the right hon. Gentleman accept that this dispute will be solved only when the parties get around a table and negotiate? To that extent, will he accept that we welcome the initiative taken by the Secretary of State for Employment in an attempt to bring that about and regret that it has not met with success? Nevertheless, will he accept that there is a distinction to be drawn between picketing by people who work in a place and by associated union members and "Rentamob" picketing of the kind we have seen? Will he therefore seek to uphold that narrow distinction in law between one type of picketing and another?

Mr. Rees: The Government certainly welcome the right hon. Gentleman's support. In terms of my right hon. Friend achieving a solution to this problem, what matters is that all involved should sit around a table. That is the best way through the problem in the hours and months ahead. As for a discussion of picketing, and peaceful picketing in particular, the trade union involved clearly understands this problem. It is clear from the report that I have had that if there are 1,500 picketing outside a very small entrance there are bound to be problems. I hope that those involved will listen to Mr. Grantham and understand that the best way is peaceful picketing and a solution such as that which my right hon. Friend is trying to achieve.

Mr. Pavitf: As a frequent eye-witness of this dispute in the last few days, may I welcome my right hon. Friend's statement, with considerable sympathy for both the peaceful pickets and the peaceful police in a rather difficult situation? But may I urge him to understand that there can be problems on both sides and that we shall look with great interest at the reports that he is receiving? However, appeals for the rule of law to be preserved come ill from the mouths of hon. Members when what is happening

is that the Employment Protection Act is being used by lawyers to try to break that Act, which makes calling upon the rule of law start to look a little hypocritical. Would it not be better, therefore, if the House acknowledged, as the Leader of the Liberal Party has just done, that the way to resolve this conflict is to solve the underlying problem? One should treat the disease, not the symptoms, and the sooner the parties concerned get around the table, the better.

Mr. Rees: My hon. Friend, who, with his colleagues in the area, has been most helpful in recent months, is right to say that the answer here is to solve the basic problem. With regard to the problems at Grunwick itself, there is no doubt that the police and the pickets who are genuinely involved want to "cool it". It needs to be cooled, or there will be further arrests and further injuries to people on both sides. The very nature of the situation at the moment is leading to that.

Mr. Gorst: May I say to the Home Secretary, as someone who experienced the violence—[HON. MEMBERS: "No. Ask a question."] May I ask the Home Secretary whether he is aware that an official of APEX is reported in the Press today as having said that he hopes that 5,000 pickets will arrive one morning and that this will be an opportunity to request the Home Secretary to use his power to order the Commissioner of Police to close the factory? Has the right hon. Gentleman such a power, and, if he has, will he undertake to do no such thing?

Mr. Rees: I have had no such approach. I am not in the business of saying what I would do in response to newspaper reports—just as the report in the Daily Express this morning was not true.

Mr. John Mendelson: When my right hon. Friend said just now that the complaints should be dealt with under the new complaints procedure, does he recall that when, on 9th February 1972, in the House, I related an incident to the then Home Secretary, the right hon. Member for Chipping Barnett (Mr. Maudling), concerning mass picketing outside a power station in Birmingham, and gave a detailed account of what had


happened there, including criticism of the conduct of police officers, I asked the then Home Secretary whether he would use his power to send guidelines to chief constables about conduct in such cases? The right hon. Gentleman replied——

Hon. Members: Reading.

Mr. Speaker: Order. The hon. Gentleman now has an opportunity to ask a question. In theory, tins is an extension of Question Time, with a Private Notice Question.

Mr. Mendelson: I am just coming to the end.

Mr. Speaker: If the hon. Member will ask a question, everything will be well.

Mr. Mendelson: Since the answer that I received was that such guidelines already exist, will my right hon. Friend say whether the new complaints procedure introduces any difference? Will he also make use of the power to send guidelines so as to ensure that the complaints which have been made do not wait for a long time but are dealt with immediately?

Mr. Rees: With reference to the exchanges with my predecessor, nothing has changed. When I spoke to the Commissioner of Police it was quite clear that he and his men wanted nothing more than to carry out the general law and the law of picketing. They would very much like to see a cooler situation than that which exists at present. The complaints procedure does not alter this at all. All that is involved is the number of complaints since 1st June when the new procedures came in and just before that. Those that are about individual policemen must be investigated in this way. These might end up by being taken to law, because the information may go forward to the Director of Public Prosecutions. But nothing has changed, and I am confident that the Commissioner wants nothing more than to cool the situation in order to allow the normal law to apply.

Mr. Tebbit: How many policemen have been wounded so far in these disorders? Can the Home Secretary say whether it is now possible for anybody working for the company to believe that any member of the Government, with the possible exception—and I say this sin-

cerely—of the Home Secretary, will be unbiased about the matters affecting this dispute since various members of the Government, including Cabinet Ministers, have been participating in the picketing? Should not those who have participated in the picketing now tell the pickets to obey the law for a change?

Mr. Rees: I have some figures here, and I would not give them to the House unless I thought that they were accurate, although this is a changing situation. Since 13th June, 28 policemen and five demonstrators have been injured. The hon. Member spoke of bias. I have no doubt—and I heard what happened when my colleagues went to Grunwick and what they said on that occasion—that when it comes to the law none is unbiased. There may be more of us on this side of the House who take a different view of the situation when it comes to working conditions in the factory.

Mr. Alexander W. Lyon: What is in the law of picketing that says that a given number of pickets is the only prerequisite for peaceful picketing? How can it be that a local police officer can say how many constitutes peaceful picketing? What about the freedom of the people working in that factory for £25 a week for a full week's work? The real threat to law and order is Mr. Ward's refusal to negotiate with the properly-accredited and very conservative and responsible union in order to get this matter settled. It is significant that the Opposition did not table a Private Notice Question about this 10-month old dispute until there were large numbers of pickets outside the gates.

Mr. Rees: On the number of pickets, these matters are questions of law and questions of the interpretation of the law in the courts. It is a complicated matter. But the police have duties in this respect, and that is much more clearly understood by those who are genuine trade unionists.
On the second point, I am quite clear that the situation inside the factory is best dealt with by negotiation.

Mr. Amery: The Home Secretary said that none of his colleagues was unbiased on the issue. If that is the situation, how can he expect the Secretary of State to


act as a referee, particularly in view of the action of his Cabinet colleagues in recent times?

Mr. Rees: The right hon. Gentleman misunderstands. We are talking about my responsibilities under the law, and they are quite clear in the support that I get from my Cabinet colleagues. The Employment Protection Act and the conditions inside the factory raise a different matter altogether. There is a strike on, and anyone who has a view about it has a right to express that view.

Mr. Atkinson: May I ask about the law on picketing? Does the Home Secretary agree that it is clearly stated that pickets have a right peacefully to approach those who are trying to get inside the factory to continue working during the dispute? If, by collusion between employers and police—[HON. MEMBERS: "No."] Yes. If by collusion between the police, those who want to work on during the dispute and the employers, who have arranged to transport them into the factory, the police aid entry into the factory of a closed bus and will not allow the pickets to interview people inside the bus, the police are guilty of breaking the law. They are denying the opportunity for peaceful picketing outside the factory by ensuring the transit of a closed bus taking workers into the factory. This is a breach of the law as it is stated.

Mr. Rees: My hon. Friend is interpreting the law in an academic way——

Mr. Atkinson: That is the law.

Mr. Rees: My hon. Friend is interpreting it, as I said, in an academic way. I have to deal with the situation on the ground and to give guidance. This is an extremely difficult environment, with large numbers involved. It would be much better if smaller numbers of people were there. In this very difficult situation, I think that the word "collusion" is wrong—[HON. MEMBERS: "NO."] What is clear as far as I am concerned is that the law must be carried out. Quite clearly there is a right of pickets to try to persuade those who hold a different view from them.

Mr. Prior: Is the Home Secretary seriously arguing that a force of pickets six times the strength of the number of people seeking to go to work does not constitute intimidation of those who are trying to go about their lawful duty? Should he not give much firmer guidance to the trade union movement and the unions involved, advising them that pickets in these numbers are totally intolerable and are an offence against the law? Should he not state that plainly now?

Mr. Rees: The answer is "No". When I discussed the numbers with the police authorities, they said that numbers were a problem but not a problem overall in the interpretation of the law. That is not to say that they would not prefer a smaller number. They would. I was asked about the overall situation and the guidance given to unions. This union, in particular, does not need guidance on this point. It understands the situation clearly. The right hon. Member has had chances in the past to be involved in trade union matters, and they are not as simple as he thinks.

Dr. McDonald: Would the Home Secretary ask the Attorney-General to direct the attention of the Director of Public Prosecutions to a report in The Guardian on 17th June which states that Grunwick has not filed any company accounts at Companies House since 1974? Therefore, we have no up-to-date information about the company's profits, wages bill or number of employees.

Mr. Rees: My right hon. and learned Friend the Attorney-General will take account of what my hon. Friend has said.

Mr. Adley: Is it the Home Secretary's understanding of the position that if a given number of people at a place of work, representing the majority of those at work, decide that they do not wish to join a trade union, they should be able to obtain the protection of the law to see that they are not forced to join the trade union? If that is the position, would the Home Secretary say that it is his understanding of the position and say what he intends to do to see that that freedom is protected?

Mr. Rees: The matter that the hon. Gentleman has raised is not one for the police. It is not a matter for me. It is I hope, a matter for ACAS. It is a matter of the employer and those employed sitting down together and sorting it out. If we treat this situation properly, I believe that there is a chance of that happening. Both sides must sit down and talk. It is intolerable that there are those there who want to make the situation worse. Those who are preventing the parties from sitting down and discussing the problems are playing into the hands of those who do not want a peaceful solution.

Mr. Wrigglesworth: Does not my right hon. Friend agree that it is remarkable that a moderate union with moderate leadership, as this union has in the country, and with moderate members on this side of the House amongst my right hon. and hon. Friends, should find itself in this situation? Does not my right hon. Friend agree that it is a result of deliberate provocation of that moderate union that this situation has occurred? Will he investigate the rôle of Right-wing pressure groups in bringing about that provocation?

Mr. Rees: I say to my hon. Friend, with his association with trade unionism over the years, that the distinction between moderate and otherwise is not perhaps the right one to draw. The word I use is "responsible", and unions of all sorts have understood this over the years—[HON. MEMBERS: "They are all moderate."] There is no need for my hon. Friends to put it that way, because I have agreed that responsibility is clearly understood on this point. On the question of conditions inside the plant, which is the key to this issue, the parties should sit down and talk, because that is the only way in which the dispute will be resolved.

Several Hon. Members rose——

Mr. Speaker: Order. I propose to call two more speakers from each side. This is not the time for a debate.

Mr. Eldon Griffiths: First, could the Home Secretary confirm that those officers who have been injured will qualify for criminal injuries compensa-

tion? Secondly, will he say how much reduction in police cover there has been in other areas of London so that this situation can be contained, and who will pay the extra cost? Thirdly, will the right hon. Gentleman reject much more clearly than he did the disgraceful suggestion of collusion between the Metropolitan Police and the employers, when in fact the policeman once again is caught as pig in the middle and is there carrying out a most difficult task with exemplary impartiality?

Mr. Rees: I have already made clear my view on collusion. Without advice I would rather not give a view about the question of criminal compensation, but I will have a word with the hon. Gentleman. I was asked the numbers of police. Not necessarily actually at the gates, but ready to be employed if required, about 600 policemen are there now. If there are 600 policemen there, then 600 fewer policemen are being deployed elsewhere.

Mr. Heffer: Would not my right hon. Friend agree that, if there are 600 policemen who have been mobilised to allow these strike breakers to go to work, it is perfectly understandable that responsible trade unionists from every trade union in the country should show their solidarity—[HON. MEMBERS: "No."]—with those workers who have been working to end poor wages and rotten conditions imposed by a rotten boss—[HON. MEMBERS: "Rubbish."]—who by any standards is still living in the last century?

Mr. Rees: Solidarity with the workers on conditions in the factory is one thing, and I understand that. I hope that my hon. Friend will not draw the wrong conclusion about the numbers. I am saying that there are 600 policemen there to be drawn upon, but not all at one time. There were 1,500 demonstrators there on Friday and so far today there are 1,200. Given that situation, the response is in the numbers that I have mentioned.

Mr. Hugh Fraser: First, would the right hon. Gentleman make it clear that it is the duty of the police to see that people are assisted in the exercise of their right to work? Secondly, will he try to expound more clearly what the guidelines are about peaceful picketing? At the moment it is not sufficient to leave


this to the courts, as I am sure he will agree. A clear instruction should be given to those persons there who are clearly acting not in the interests of either the union or those employed but in the general interests of mass disorder.

Mr. Rees: The police are protecting the right to work. They are also protecting the right to picket. The two go together. With regard to the activities of the police, I have noticed over the years—I noticed it during the miners' strike in the early part of this decade—that it is not so much points made in writing; it is not so much guidelines in that sense of the term. It is also an understanding of relationships between policemen and pickets, and in most cases that suffices. We shall get back to that only if the numbers are reduced.

Mr. Newens: Does my right hon. Friend agree that the basic cause of this dispute is the arrogant anti-trade union attitude of the employer, who refuses to talk about this matter? Will my right hon. Friend take steps to bring forward the High Court action in order that the powers of ACAS can be confirmed and this whole matter settled in a more reasonable manner?

Mr. Rees: The cause of the dispute is clearly in the plant. I have no locus with regard to the High Court. I am not sure what locus my right hon. and learned Friend the Attorney-General has, but his attention will be drawn to what my hon. Friend has said.

Mr. Alexander W. Lyon: On a point of order, Mr. Speaker. I noted your ruling at the beginning of this question about the admissibility of certain matters in discussion in the House and their relationship under the sub judice rule. You will remember that a week ago I applied for leave under Standing Order No. 9 to have an urgent debate on this dispute. You then ruled that no discussion was permissible and that no application for a debate under Standing Order No. 9 could be allowed.
As, Mr. Speaker, you have now recognised that it is possible for the House to discuss the general principles of the issue without impinging upon the right of the court to deal with the alleged offences against particular persons, would it not now be right for you to allow an

application under Standing Order No. 9 so that the House could express its view upon this issue? It is clearly in the interests of everybody—the police, the strikers and those working at the factory—that there should be an urgent debate in the House so as to put pressure upon all parties to come to a peaceful conclusion to this dispute, which has lasted 10 months. It would, therefore, be in their interests for there to be an early and urgent debate in the House. Would you allow an application under Standing Order No. 9?

Mr. Gorst: Further to that point of. order, Mr. Speaker. For you to rule in accordance with what the hon. Member for York (Mr. Lyon) has argued, it would be necessary for all the matters relating to ACAS which you have ruled are sub judice to be brought into consideration, as no negotiation or search for a compromise is possible until the matter before the High Court is out of the way.

Mr. John Mendelson: Further to that point of order, Mr. Speaker. In view of the submissions now being made to you, may I submit to you that, as it has been established clearly this afternoon that the power and duty of the Home Secretary to issue guidelines during an industrial dispute involving the police have remained unimpaired, as he himself has confirmed, it is essential that it should be possible to question the Home Secretary, who is responsible to the House and not to the courts, during the period of the dispute? Therefore, the right to move the Adjournment of the House under Standing Order No. 9, in spite of what the hon. Member for Hendon, North (Mr. Gorst) has said, must be fully preserved if the responsibility of the Home Secretary is to be maintained in Parliament.

Mr. Atkinson: Further to the point of order, Mr. Speaker. You will recall that during the debates on the formulation of the law as it affects this case, there was some discussion about the use of buses. It is on that, and the guidelines and the necessity to have a debate, that I would strongly urge that we have a chance to look at a practical example of what was in mind in many of the warnings that some of us gave about the use of buses during a dispute to get workers inside a factory—with the assistance of police, I may add. Because of that very point, I


urge the Home Secretary again to have a look at this business of guidelines, and I ask you, Mr. Speaker, to consider the possibility of an urgent debate.

Mr. Speaker: I spent a considerable time last week examining this question, because, obviously, I want to preserve the rights of the House to debate issues of national concern, and, at the same time, I must honour the protection of those who are charged before the courts. That is why I gave a very careful ruling on Friday. I am sorry that I did not have a full House when I gave it, but if hon. Members will study Hansard they will see that I concluded by saying:
… The general issue of the strike as such is not sub judice."—[Official Report, 17th June 1977; Vol. 933, c. 734.]
If an application under Standing Order No. 9 is put to me, I shall consider it on its merits. I cannot say now that I should accept it. Nor do I say that I should reject it. It would be dealt with solely on its merits at the proper time.

Mr. Alexander W. Lyon: Further to that point of order, Mr. Speaker. In those circumstances, when is the proper time, in view of the fact that——

Mr. Speaker: Order. The hon. Gentleman, surely, has by now learned that it is when we have finished statements.

Mr. Molloy: In so far as the appeal by the trade union leader for civilised joint discussion with the management has been supported by the Home Secretary this afternoon and by the Leader of the Liberal Party, would it be possible, Mr. Speaker, for you to give an opportunity to the right hon. Member for Penrith and The Border (Mr. Whitelaw), who asked this Private Notice Question, to make his contribution to support that appeal?

Mr. Pavitt: On a separate point of order, Mr. Speaker. May I seek your guidance on the protection of the privileges of hon. Members? Is it in order for an hon. Member to give the impression on radio that he is the local Member for a particular area when in fact he is not? Second, is it in order for an hon. Member to visit the constituency of another Member and to involve himself in local things without first according the courtesy of telling, in this case, my right

hon. friend the Member for Brent, East (Mr. Freeson) that he is going there?

Mr. Speaker: It is a courtesy that we notify each other when we visit other Members' constituencies. It is not always observed. The hon. Member for Bolsover (Mr. Skinner) was in my constituency a week ago. [HON. MEMBERS: "Hear, hear."] Order. I was very interested to read about it in the newspapers. But] cannot rule on the other abstract issue that the hon. Gentleman put to me.

EUROPEAN COMMUNITY (COUNCIL OF DEVELOPMENT MINISTERS' MEETING)

The Minister of State for Overseas Development (Mrs. Judith Hart): With permission, I should like briefly to report to the House the outcome of the meeting in Luxembourg last week of the Council of Development Ministers.
The Development Council made considerable progress last Thursday. The main item for decision concerned EEC aid to non-associated developing countries, on which no progress was made at the last meeting in March. Last week we did succeed in reaching agreement in principle to the release of the 45 million units of account for the non-associated countries included in this year's budget, and on the general lines of the guidance to be given to the Commission for the expenditure of this money, including that the funds will be distributed to Asia and Latin America in the ratio of 3 to 1.
There remains a problem of securing a draft regulation, and the Council will return to this at its next meeting. What matters is that the non-associated countries can now have this assistance, provided that the European Parliament will accept this procedure, which will, of course, be without prejudice to the future. I very much hope that it will.
We also made further progress on food aid. At our last meeting, some member States were unconvinced of the need for an increasing programme of Community food aid. The Commission withdrew its proposal for this, and we asked for a paper by the Commission analysing the food needs of the developing countries. On the basis of this, we reached agreement that there is certainly a continuing need for food, and, subject to a reserve


by two delegations, our conclusion was that the Commission should bring forward once again proposals for an increasing programme.
Our last main item was a general discussion, based on an excellent paper from the Commission, on questions of rural development, agriculture and food production in the developing world. We invited the Commission to carry forward our most valuable discussion by arranging a meeting between experts on rural development.

Mr. John Davies: I thank the right hon. Lady for her statement. As regards the first point that she made, does she know that in the House generally there is a considerable measure of interest and anxiety about what appears to be an imbalance between the aid granted to the associated countries of the Community and to the non-associated countries, particularly those in Asia?
In view of what the right hon. Lady says, does the procedure which is now proposed mean that not only would the European Parliament have to accept that it did not discuss this matter before it went into effect but also that this Parliament would not have an opportunity of debating the issue of this aid to Asian countries before the provisional decisions reached by the Council came into effect?
Second, on the subject of food aid, will the right hon. Lady accept that, while being fully sympathetic to the need for a food-rich area such as the Community to make provision for the wants of countries where there is a severe dearth of food, the House generally may feel that there is a greater urgency in ensuring own-production of food within the areas concerned? Would she, therefore, accept that the last paragraph of what she has said has great relevance to the question of the future provision of food for the countries in question?

Mrs. Hart: On the right hon. Gentleman's second point, there is no doubt whatever, and there is general agreement within the Development Council, about the absolute priority to be given to increasing food production within the developing countries. But it is equally accepted, particularly on the basis of the very good Commission paper which was presented to us on this matter, that this takes some time, a matter of years. One

cannot increase agricultural production overnight. In the meantime, given the great need for food in the developing countries, the Community needs to increase its general food aid.
As I say, two delegations had to lift their reserve on this proposition, but this was the general understanding. It does not conflict one tiny bit with the total appreciation—I think that the British Government have been in the lead on this—that increased food production within the Third World is the key purpose at which to aim.
On the right hon. Gentleman's first point, the 45 million units of account are now to be released. There is a problem in that the European Parliament now has to unblock its disapproval of the procedures. Given the extreme need of the non-associated countries for assistance of this kind—and very rapid assistance—I very much hope that the European Parliament will be prepared, at least on an ad hoc basis, to accept this decision for this year, given that the general framework regulation has still to be resolved.
I completely accept, with the right hon. Gentleman, that there is general agreement in this House about it. He may recall that this was one of the essential questions under debate in our own renegotiations on this matter. We got only a tiny bit of the way there, but we still press on, and a certain degree of progress was achieved last week.

Mr. Spearing: Does my right hon. Friend recall that in the debate last Monday it emerged that there would be an increase in the token amount which she has announced today for non-associated countries only on condition that there was greater harmonisation of policies within the EEC? Can she say a little more about that? Is the United Kingdom approach to overseas aid—that is, to help the poorest in the poorest countries—shared by our other partners in the EEC? If it is not, can my right hon. Friend tell us which are the countries which have the greatest doubts on this policy?

Mrs. Hart: If I may put it in this way, I think that whatever I was required to say last Monday on this matter has to some extent been overtaken by the results of the Development Council meeting in Luxembourg last Thursday. We have


agreed to release the 45 million units of account. This is not related at this moment to a necessary resolution of the framework regulation question, which, as I have said, we have postponed to a further meeting. We have agreed that the general criteria governing the distribution of this money should concentrate on the needs of the poorest countries and the poorest people. Hence, we have agreed, within the context of the natural problems of actually disbursing the money and identifying projects, that the proportion on a general overall framework should be three to one—three for Asian developing countries and one for Latin America.
This was to some extent a compromise in that the Latin-American countries cannot be regarded as being among the poorest. Nevertheless, what it means is that as a result of this compromise three-quarters of the 45 million units of account stand to be spent on the poorest Asian countries before the end of the year.

Mr. Body: As the right hon. Lady knows better than anyone, in matters of agriculture so many of these countries depend upon monoculture. Does she now say that as a result of the discussions her partners in the Council of Ministers are now more sympathetic towards countries which are dependent on one or two crops and are now more likely to give greater access in future to those crops in order to enable those countries to improve their standard of living?

Mrs. Hart: I think that it is true that there is agreement regarding agricultural production and access to markets. We found this last Thursday in the very general discussion which we had on rural development and agriculture, which I had proposed at our March meeting because, frankly, I felt that it would be good for the Development Ministers to discuss development issues without precise words on a piece of paper to be agreed or disagreed. Clearly, there is very general agreement among the Development Ministers of the Nine on agricultural production and, indeed, there is an understanding that access to markets for developing countries' semi-processed and processed goods is almost a necessary consequence of that. This is very generally understood among Development Ministers. But one of the problems in Brussels and Luxem-

bourg, as also here in Whitehall, is that there can be an inadequate understanding between various Departments and Councils about particular conclusions.

Mr. Russell Johnston: Will the right hon. Lady take it that we on the Liberal Bench both welcome the decision and congratulate her on the part which she played in it? Could she take the opportunity also of paying a specific tribute to the work of Claude Cheysson, the Commissioner, partly because it is sometimes worth pointing out in the House that the Commission is sometimes right? Finally, in regard to the European Parliament and the procedural problem to which the right hon. Lady drew attention, can she confirm that the Parliament as an institution has played no part in delaying the basic nature of this decision up to now?

Mrs. Hart: I am very glad to agree with the hon. Gentleman in his first point. In my view, Claude Cheysson is one of the best Commissioners of the European Commission. In my experience—I have known him for many years now—he has always offered constructive and, indeed, radical propositions to us. The problem has not been in the Development Council and the Commission. It has lain, as I am sure the hon. Gentleman knows, in certain difficulties on the part of certain member countries.
On his second point, I am sure that the hon. Gentleman is absolutely right. Until now, the matter of the release of the money from this year's budget—that is, the 45 million units of account—was, as it were, blocked as between objections from the European Parliament and difficulties within the Development Council. I should not for a moment say that the European Parliament had so far been holding it up. What I do say, however, is that now we have got the matter through the Development Council I very much hope that even on an ad hoc basis for this year, while we wait to resolve the outstanding problem, the European Parliament will agree that the money can be disbursed. If it does not, the only sufferers can be the poorest countries.

Sir Bernard Braine: Are we to infer from what the right hon. Lady has said that there is nevertheless an impasse between the Council of Development Ministers and the European Parliament, and this is in large measure a reflection


of the failure of our partners on the Continent to understand the special position of non-associated countries, especially the very poor in Asia? If that be so, is there any special step which we can take in this House? For example, could not the matter be debated, as my right hon. Friend the Member for Knutsford (Mr. Davies) suggests? Is there not some step which we can take whereby the facts of life and the realities of the Third world can be brought home to the European Parliament?

Mrs. Hart: It is certainly true that there has been this continuing problem, throughout this year at least, and at the last Development Council meeting in March, which was the first one at which we held the Presidency, we found that there was an impasse. There was no clear indication that we could find a way through to the release of the 45 million units of account set aside in the budget. We have now found a way in the Development Council. The difficulty is that there is a block at the moment by the European Parliament, which I am sure can be overcome. In precise answer to the hon. Gentleman, I would say that if our delegations from this House, from all parties, to the European Parliament could impress the matter upon our European colleagues there, perhaps in these terms, "All right. There is this procedural problem of arriving at a framework regulation and arriving at the precise nature of the responsibilities as between the Commission and the Council, but can we resolve that a little later and, for the time being, allow the 45 million units of account from the budget to be spent?", I am sure that the European Parliament would respond to the appreciation of all parties in this House of the fact that that is essential.

Several Hon. Members rose——

Mr. Speaker: I propose to call the three hon. Members who are now standing, if we can have brief questions and brief answers.

Mr. Rhodes James: How is the proposed food aid to be channelled? Will it

be channelled through existing international institutions, or is it seriously proposed that we should have yet another institution for the distribution of food aid?

Mrs. Hart: No, there is no new proposal for the way in which the food aid will be channelled. It will be done according to the traditional precedents of the EEC.

Mr. Costain: In her understandable enthusiasm for encouraging agricultural production in underdeveloped countries, will the right hon. Lady undertake to read the reports of the groundnuts scheme and learn from the mistakes of her earlier Labour predecessor, who had the same enthusiasm?

Mrs. Hart: I regard that as the most trivial comment I have heard in the House for some time. I can assure the hon. Gentleman that the lessons of the groundnuts scheme, both positive and negative, were fully learnt—how long ago was it?—30 years ago.

Mr. Marten: Can the right hon. Lady confirm that she has not had a letter from Mr. Cheysson telling her what she may or may not say in this House? Secondly, on the question of aid and trade, can she say something about the Community's attitude to the Multi-Fibre Arrangement, which does not seem to be doing much good to some of the Asian countries?

Mrs. Hart: I can indeed confirm that what I say in this House is what I say. I tell the House what I think I should tell it, and nobody influences me as to what I should tell it. The Multi-Fibre Arrangement is not my direct responsibility. Naturally, I am concerned about a number of Third world interests in this matter, particularly those of the Asian countries, but, as the hon. Gentleman will appreciate, any questions about it would need to be directed to my right hon. Friend the Secretary of State for Trade.

GRUNWICK PROCESSING LABORATORIES LIMITED

Mr. Gorst: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and urgent matter which should have precedence over business.
The first of the two interrelated issues is that
members of the Union of Post Office Workers are refusing, in breach of Section 58 of the Post Office Act 1953, to handle mail for Grunwick Processing Laboratories.
The second issue is that
the picketing at Grunwick"—
where a total of a thousand or more pickets were assembled and 17 arrests were made this morning—
has created a situation in which intimidation and violence threaten the freedom of Grunwick workers to carry on their legitimate activities as well as constituting a threat to the general maintenance of law and order.
Since I first gave you notice of my intention to raise this matter with you, Mr. Speaker, no undertaking has been given by the Home Secretary that no Cabinet Ministers would join the picket lines. This is of especial importance when the Secretary of State for Employment is seeking to arbitrate in the matter.
Finally, I submit that all these matters, which vitally affect my constituent, Mr. George Ward, the Managing Director of Grunwick, fully justify an application under Standing Order No. 9 as they are specific, urgent and extremely important and should take precedence over other business.

Mr. Speaker: The hon. Gentleman gave me notice early this morning that he would seek to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believed should have urgent consideration. There are two issues. The first is that
members of the Union of Post Office Workers are refusing, in breach of Section 58 of the Post Office Act 1953, to handle mail for Grunwick Processing Laboratories.
The second issue is that
the picketing at Grunwick has created a situation in which intimidation and violence threaten the freedom of Grunwick workers to carry on their legitimate activities as well as constituting a threat to the general maintenance of law and order.

I listened to the long exchanges this afternoon. As the House knows, under Standing Order No. 9 I am directed to take all the factors into account but to give no reasons for my decision. I am aware of the deep interest in this matter, and I have given careful consideration to the application both this afternoon and during the day since I had notice from the hon. Gentleman of his application. But I have to rule that the hon. Gentleman's submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

Mr. Alexander W. Lyon: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, to call attention to a specific and important matter that requires urgent consideration. My application concerns the Grunwick dispute, but, unlike the application of the hon. Member for Hendon, North (Mr. Gorst), it is about the dispute's wider implications and its nature and the nature of the picketing at the factory. I couch the matter in the following terms:
the dispute at Grunwick Processing Laboratories Ltd. and the nature of the picketing at the factory.
Such a motion would allow the House to consider all aspects of the dispute, which has now been going on for 10 months. I urge that the wider implications should be considered by the House at an early stage.
I did not make an application this morning, Mr. Speaker, but last week I made an application which you ruled out of order. My application has now become in order only because of the change in your ruling.
I urge that the House should consider the dispute at an early stage, and the earliest possible time is now tomorrow afternoon. If we were to consider it then, the likelihood is that a great deal of the heat now being generated outside the factory could be transferred to this House and sublimated into much more constructive channels.
We have now taken an interest in the dispute for the first time since it began last August, when there were two Adjournment debates about it. Since then it has been simmering on. A number of people have been picketing outside the factory for 10 months in the pursuit of


justice, and nothing has been done for them, apart from the fact that the Advisory, Conciliation and Arbitration Service has made a ruling which is being disputed by the management.
It is no wonder that in those circumstances a great many people, not all of them members of APEX and not all of them workers at the factory, feel that the only way to right that injustice is to stand in the picket line outside the factory and thereby promote a confrontation between them and the police. If that situation is to be resolved, and quickly, the House must put pressure on not only the Government but the management and the union to come to a peaceful solution. It is for that reason that I suggest that it would be helpful to all if there were a debate tomorrow.

Mr. Speaker: The hon. Gentleman makes his application arising out of the exchanges this afternoon and that obviously puts it in order.
The hon. Gentleman and the House know that I do not decide whether a matter is to be debated in the House. I do not decide whether it is to be debated in the near future. I have to decide only the very narrow issue whether it should have precedence over the business of the House for today or tomorrow. That is the only power that lies with me.
I have listened carefully to the arguments of the hon. Gentleman, who seeks to move the Adjournment of the House to call attention to
the dispute at Grunwick Processing Laboratories Ltd. and the nature of the picketing at the factory",
but I have to rule that his application does not fall within the provisions of the Standing Order and, therefore, I cannot submit it to the House.

Orders of the Day — SUPPLY

[23RD ALLOTTED DAY]—considered

Orders of the Day — HOUSING (ENGLAND AND WALES)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ashton.]

4.28 p.m.

Mr. Michael Heseltine: This afternoon we are to discuss the Government's housing policies and their wider housing implications. Every debate on domestic matters must reflect the international economic crisis of 1973, and housing can be no exception. But we on the Conservative Benches believe that there are three specific ways in which the Labour Party, first in Opposition and now in Government, have worsened the effects of the international economic crisis on this country.
First in Opposition and then in their early days in Government, between the two General Elections, Labour Members misrepresented to the people the gravity of that crisis, whereas the Conservative Government had begun to take the necessary steps and had put the issues to the country as fairly as we could. It was the Labour Party in Opposition that decried every effort we made to introduce a new awareness of the constraints that would be necessary following the quintupling of the price of oil.
Labour having misrepresented the crisis, its early economic policies when in Government undoubtedly stimulated the rate of inflation in this country, and the national economic dimension to the international crisis was a great deal worse than it otherwise might have been. It is impossible for the housing programme to remain immune from those broad economic trends. If that was not enough, this Government then proceeded to introduce a series of specific measures which singled out housing for particularly harsh treatment.
Let us look in greater detail at the three strands to which I have referred. In the days of late 1973 and early 1974.


as we have pointed out on many occasions, there was an abundance of promises as to what the housing policies of the Labour Government were likely to be. They had all the ingredients of electioneering and few practical realities. We pointed out frequently the falsity of the claims that there would be cheap land available, that Labour would reverse the decline in the housing programmes and that we would see a stable building industry and a plentiful supply of local authority mortgages. That was the background of the Government's approach to housing in those days.
But when the Government moved on in their general economic policy, their macro-economics created a climate in which there was no conceivable alternative to a decline in the housing programmes of both the public and the private sectors. With the Government committed to high public expenditure, leading to high inflation and high interest rates, it was inevitable that, with building costs outstripping prices, and with high costs of borrowing and mortgages, coupled, for the free-enterprise building industry, with a diminution in the rate of growth either to nil or to a very low rate, there would be a gradual and increasing downturn in society's ability to pay for extra housing.
The figures are clear. In the 12 months to the end of December 1976, prices rose by 15·1 per cent. and average weekly earnings rose by 11·8 per cent. That is the background against which the community is not able to find the vital resources for private sector housing. One also saw the makings of the economic crisis which was to lead to the constraints on the public sector. Therefore, the nil or low-growth economy does not provide a background against which it is possible for any politician to claim that there will be a maintenance of hitherto higher housing programmes. Yet the Government gave the impression that that situation could somehow be avoided.
I am dealing with specific issues applied to housing, and I believe that they and the general economic background, which the Government have worsened, made it obvious where the programmes that the Government introduced must lead. I was re-reading today

the remarkable statements which the then Under-Secretary of State for the Environment, the hon. Member for Manchester, Ardwick (Mr. Kaufman), made in going around the country in order, according to his own words, to get the Chancellor into trouble. He was encouraging local authorities dramatically to increase their housing programmes—intentionally, he said, so that the Chancellor of the Exchequer would be faced with a worsening economic problem.
It is not often that I congratulate the hon. Gentleman on success, but without doubt he achieved success in that direction beyond his wildest dreams. The Government pursued policies which, alone, with the exception of France, among equivalent economies, placed reliance on public sector provision of housing. If one looks at the chart showing the contributions of the public and private sectors, one sees that we are second in relying on the public sector for the provision of new houses. That is an unhealthy over-reliance on the public sector, and it provides the least effective deal from the community's point of view.
Secondly, partially for reasons to do with the building industry itself and partially for their own egalitarian concepts, the Government have introduced measures which have had a severe demoralising effect upon companies in the building industry. For example, the capital transfer tax, as in so many other industries, has had the effect of making a significant number of medium-size companies wonder what is the purpose of sweating it out and staying in business.
Then there is the Government's threat of legislation to favour direct labour organisations. Nothing is more revealing of the Government's cynical approach to politics than their method of solving the direct labour problem. We made it clear that, if the Government's words about direct labour measures meant anything, their legislation could find its way through the House, because we are as keen as the words used by the Labour Party in its policy document on finding a solution. If it were a question of improving efficiency and getting an element of accountability in direct labour organisations, as the Government said it was, there would be no difficulty in persuading the House to pass such a measure. We made it abundantly clear


that such a Bill would have been acceptable with that express objective. But that was not the true objective.
The true objective was dramatically to extend the powers of direct labour departments of local authorities, and we made it clear that there was no way in which we were prepared to tolerate such a doctrinal extension of Socialist powers. The Government abandoned the opportunity that we would willingly have given in order to improve the efficiency of direct labour organisations, and now the Leader of the House has made it clear that the moment there is a majority—if ever there is—behind a Socialist Government we shall again be faced with the threat of legislation to extend the power of direct labour departments.
Thus, everyone involved in deciding whether to invest in a building company or to remain in the industry knows that it is the express purpose of the Labour Party to give a special and privileged position to direct labour organisations. Why should anyone continue to go through the agony and anguish of maintaining a posture in the building industry if it means that in the future there will be a growing threat from direct labour?
The other side of the coin is the use that it is now widely believed the administrative machinery is making of the 714 certificate. One can argue a narrow administrative point for the introduction of 714 certificates, but many people outside believe that the certificates are being used not to improve the efficiency or administration of the industry but to squeeze out a number of small businesses involved. The important thing is not what Ministers say or believe but what those people engaged in the industrial activity affected by 714 certificates believe—and they believe, widely and sincerely, that they are being discriminated against.
In the circumstances it is not surprising, as the Municipal Review has made clear, that we now have a higher proportion of unemployment in the construction industry even than in the high watermark of unemployment under the Labour Government in 1931. More than 220,000 people in the construction industry are unemployed. The previous record was 154,500, about 18 per cent., when unemployment reached the ultimate record in 1931.
The next area where the Government have specifically, for doctrinal reasons, been prepared to introduce discriminatory concepts in housing is in the withdrawal of tax reliefs. I have heard and can understand the words of the argument that one should not allow mortgage interest deductions on high levels of mortgage The theory, I suppose, is that that would mean that there would be more money to go round and that there would be a more egalitarian use of resources. In practice, however, what happens is that a significant number of people who would like to trade up from their existing level of house to a higher level are prevented by the tax system from doing so, which means that the level of demand for low-priced houses is kept higher than it otherwise would be. The effect is to keep the level at the lower end of the market higher than it would be otherwise, and the people who suffer are not only, to to some extent, those at the top end of the market but, even more dramatically, those at the lower end who cannot get houses from people who would like to sell them but cannot do so because of Government policy.
What is the Government's position on this matter? Labour Party policy is to remove interest relief on mortgages over £25,000. Anyone trying to plot the future clearly understands what the Labour Party would like to do. There is an electoral difficulty because, with the best will in the world and the most optimistic of scenarios, we shall be fighting a General Election in months rather than years. Therefore, the fear is that the issue will be fudged in the election but that after the election, if the Labour Party won, there would be a toughening of the mortgage interest relief provisions. That would be another disincentive to the expansion of the market.
The other matter which was once regarded as the jewel in the crown was the whole paraphernalia of promises which surrounded the Community Land Act and the development land tax. I shall deal with that matter later.
Against that background, it is not surprising that the latest figures for starts are as depressing as they are. According to the 2nd June Press release from the Department of the Environment, public sector starts are down 39 per cent. on a year ago and private sector starts are


down 25 per cent. on a year ago. I accept that there has been a tiny flicker of improvement in the private sector in the last month, but the improvement is a percentage increase on such a low base as to mean that we are dealing with very small figures indeed. Overall, the level of decline in starts means that we face a very grim year for new housing in total. The local government figures particularly show dramatic reductions. We have now come virtually full circle from the heady days when the Under-Secretary of State for the Environment was first getting the Chancellor of the Exchequer into trouble.
It was impossible for the Government to sustain the momentum which they had put behind local government housing. It is now recognised everywhere, except in the published words of the Government, that local authority house building is the least effective form of provision of new houses. Every new council house built commits the community to a subsidy of more than £1,000 in the first year. The NEDC report on housing makes the point that it will be into the next century before we see the profit on the council houses being built now.
I understand—I hope that the Secretary of State will take the opportunity to confirm this—that the good news is that after three years of trials and tribulations the housing review is at last on us and that next week, despite all the delays, we shall be allowed to see the conclusions which the Government have reached. After three years of intensive wrangling and bickering, the conclusions had better be impressive.

Mr. Frank Allaun: Does the Conservative Party, if it should become the Government, intend to cut down the production of council houses on which most working people do and must depend? [HON. MEMBERS: "Nonsense."] Let the Shadow Minister answer. Secondly, does the Conservative Party, if it became the Government, intend to cut down the subsidy on council houses, which would inevitably increase rents for millions of people? May we have a straight answer?

Mr. Heseltine: The White Paper Cmnd. 6393 commits the Government to increase to 50 per cent. rents as a proportion of total housing revenue by the

end of this decade—in three years. By making that important judgment the Government are moving in the right direction, and as a bipartisan approach—[Interruption.] I am simply quoting the Government's White Paper and the Chief Secretary's own statements on these matters. I believe that, broadly, that is the direction in which the Government will be forced, and I should support them in the policy outlined in Cmnd. 6393 in general terms, without naming specific figures, because I believe that they were right. Therefore, we can achieve a bipartisan approach to the question of council rents.
The hon. Member's second question was whether the Conservative Party would reduce public authority starts. The problem is that public authority starts are falling so fast that we cannot tell what their level will be at the next General Election. It is therefore impossible for us to answer the question. If the hon. Member will tell me how far they will have dropped by the time of the next General Election, it will be possible for me to make a judgment.
We believe that there is a strong argument for reallocating housing resources because we think that there are ways in which we can achieve a better deal for the community. I shall explain later where we think the money should be spent.
On the question of subsidisation of the council tenant and the owner-occupier, it is incontrovertible that the social benefits per pound spent in subsidies argue strongly in favour of encouraging the private ownership of homes. According to the latest information, the average owner-occupier gets a benefit of about £118 a year. The average council tenant gets a subsidy, including rebates, of well over double that sum—about £273 a year. The average amount of mortgage relief for someone taking out a mortgage today is £300, whereas the average amount of subsidy from which a new council house tenant benefits in the first year is over £1,000. Therefore, it is dramatically more expensive to sustain the public provision of housing than is private provision.

Mr. Bruce Douglas-Mann: Does the hon. Gentleman agree that, on average, owner-occupied


houses are sold every seven years and that consequently the subsidy starts again at a very much higher level, and that a subsidy is received in respect of an owner-occupied house which is 100 years old, whereas the subsidy on a council house ceases within 10, 15 or 20 years, depending on the rate of inflation?

Mr. Heseltine: It is the people with whom we are concerned. The object is to encourage people to own their houses. After helping the majority of people to own their houses, we are still subsidising them by only £118 a year.
The average mortgage lasts for seven years. It is desirable for people to move up the scale and to acquire more expensive houses as their earnings increase, because it encourages people to save and to move and it enables houses at the lower end of the scale to be released for young couples buying houses for the first time. Therefore, in every way it is a desirable social objective to encourage people to move up the social structure, and I would not wish to do other than to put that firmly at the forefront of the policy.
Therefore, to use resources economically in continuing a massive council house building programme means making the judgment to achieve less in terms of new housing than would be possible if one chose an alternative method of using the money. That is why we argue persistently that there is a need for a new emphasis; and, although there must be a continuation of local authority provision, particularly for the elderly and in stress cases, the emphasis should be put more on modernisation and renovation for the provision of incentive for direct owner-occupation.
It is a sad reflection that in its October 1974 election manifesto the Labour Party should have given the impression that there were easy alternatives available. The party claimed that
Local councils' lending will be expanded so that they can play a major part in helping house purchasers".
Nothing could have been put before the electorate in starker terms or in more dramatic language. The Labour Party spoke of young people wanting to buy their own homes. After all, that is a party which is obsessed with election manifestos, with people hawking their

consciences around and saying that this or that is writ large and that the party has promised to do it. It is frequently said that the party must not deviate by one fraction of a millimetre from the ark of the covenant or the tablets of stone.
When the Labour Party said that it would expand local authority lending, potential young purchasers were entitled to believe that the words meant what they said. Yet the £734 million available from this source of revenue hi 1974–75 is now down to £116 million. That is the scale of the reduction in the provision of local authority mortgages from a Labour Government who had promised young couples that this sort of provision would be increased.
The Government have been forced to introduce tough controls of local authority building programmes, and all over the country a large majority of local authorities, Labour and Conservative, are being forced by the constraints of the Government to reduce the levels of local authority building. [Interruption.] The Secretary of State is tut-tutting and accusing me, therefore, of giving a slightly false impression.
I shall read a letter written to my right hon. Friend the Member for Knutsford (Mr. Davies) from the borough of Trafford, in Greater Manchester. It was discussing the problems faced in that area, where properties had been bought which it had been intended to modernise. This is what the chief executive officer of the borough said:
It was intended that the property would be converted during the current year but the Department of the Environment have so cut back the Council's allocation under Section 105 of the Housing Act 1974 for the improvement and conversion of Council dwellings that it will no longer be possible to continue with the conversion of this property this year. In fact the allocation is so low that it is unlikely that the Council will be able to continue with all schemes commenced in 1976–77 let alone commence any new schemes…. In the circumstances, the only thing the Council can do with the above property is to keep it as secure as possible from vandals in the hope that the DOE will allow an increase in the 'Section 105' allocation or give an allocation in 1978–79 sufficient to enable conversion work to proceed during that year.
If the Secretary of State is suggesting that there is no constraint on local authorities, that is out of accord with the evidence flowing in to hon. Members on both sides of the House. I say to the


Secretary of State and to the House that I would not underestimate the difficulties of stimulating the private sector in the economic climate that the Government have to a great extent created, but I believe that the private sector now offers the only alternative for stimulating housing supply in the foreseeable future.
With the constraints on public expenditure which the country now faces, the alternative must be to look to the private sector. But there are other arguments. The fact is that private ownership is what the community at large, to an overwhelming degree, sees as a prime political objective. Ownership is what the people want, whether they be in rented private accommodation or in local authority rented accommodation.
Given that the public sector has not the resources to increase its commitment to housing, and given that there is, therefore, no method by which the Government can prime the housing pump on a large scale, how are people to be persuaded to part voluntarily with a higher proportion of their savings, which they are now using for a range of other things, and to put this into better housing? The only way in which to do that in a nil-growth or low-growth economy is by giving an infusion to their commitment, and that can be done only by making possible an increase in ownership.
The policies which seem to me to be needed are those which place special reliance on the incentives to the private housing provision sector. Without listing them in order of priority, there are sx suggestions that I put to the Secretary of State, not altogether with total optimism.
I believe that the whole charade of the Community Land Act must now be scrapped. In reality, if one can say so in the privacy of these four walls, the Secretary of State knows that the Community Land Act is a major Socialist disaster. The Secretary of State knows as well as I do that his GNLA 12—for the benefit of any hon. Members who have not kept abreast with the latest terminology, these are General Notes to Local Authorities—has destroyed the Community Land Act.
The whole concept was to have fastrolling programmes building up in the future so that local communities could know that there was an ongoing pro-

gramme constantly onstream, regardless of intervention one way or another. But all that has gone, because local authorities, under the Secretary of State's circular, now have to get approval from the Secretary of State. To get this approval, they have to show that any land they acquire under the Community Land Act is not only to be sold off within two years but also sold at a price which reflects the cost price. There is, therefore, no opportunity for the local community to stockpile, to have a rolling programme or to have any massive future plan. It has been made perfectly clear that with these great constraints, local authorities no longer have the ability to finance such a programme, even if they wish to do so.
In support of my general contention, I refer the House to a statement from the Association of Metropolitan Authorities, reported in Building Design of 17th June. The House will know that this is a Labour-controlled local government organisation. The chairman of the AMA, Jack Smart, is reported as saying that controls are
causing frustration, disillusionment and, worst of all, loss of opportunities.
Various examples of the problems are given. The chairman points out that
the restrictions have resulted in a catalogue of potential developments lost, delayed or diverted to privately owned land.
That organisation represents 77 authorities. As I have already indicated, it is a Labour-controlled local authority association talking about a Labour Government.
The concept of the Community Land Act, therefore, is as dead as the dodo in regard to its positive commitments. But that is not the end of it, because it hangs like a spectre and is always being referred to. Long speeches are made by local Labour members saying that the time has come to resurrect it or that more money can be obtained for the purpose. It is, in fact, an illusion that will not come about. Given that the Community Land Act process of compulsion cannot come about, because of the financial constraints, what, then, is the only alternative? The only alternative is the private sector.
The first issue is the provision of land. Here we run straight into the barrier of the development land tax. Given that one is dependent upon private owners of land


to bring forward land voluntarily for development, what conceivable incentive is there for doing so if they know that they will have to pay about 66⅔ per cent. or 80 per cent. tax, and by the end of the decade perhaps 100 per cent., because that is the levy imposed by a Labour Government? There is no way in which land will be made available when we have tax rates of that order. The fact that we have that barrier is a direct consequence of the intervention of a Labour Government. We say clearly that the Community Land Act and the development land tax are barriers to wider ownership of homes.

Mr. Frank Allaun: I am listening carefully to the hon. Gentleman, and I should like to put to him a question about his party's policy. Do his words mean that the Conservative Party, if in power, would remove the development land tax, when previously the Conservative Party has taken the view that it would maintain that tax? Since vast fortunes can be made overnight once planning permission is given to build on potato fields, does it also mean that the Conservative Party will allow such resources to be taken away from the community?

Mr. Heseltine: No, that is not the policy of the Conservative Party, as the hon. Gentleman knows. We are saying that a balance has to be struck. There has to be a form of capital taxation, as we have made clear. There is no issue of principle between the hon. Member for Salford, East (Mr. Allaun) and the Opposition. The difference lies in our practical approach to the supply of land. If one is totally dependent on the voluntary provision of land, one must pitch tax rates at a level at which supply of land will flow forward. That is our position, as we have made abundantly clear.

Mr. Douglas-Mann: Is the hon. Gentleman suggesting that the present reduction in private house-building is caused by a shortage of land, or by a shortage of investment, or a lack of willingness to invest? I do not think the hon. Gentleman is seriously suggesting that there is now a shortage of land, but I should like him to clarify that point.

Mr. Heseltine: Undoubtedly the view of the experts is that the shortage of land is a growing feature as money from the

banks dries up. A large amount of land was available to house builders in the early 1970s and previously. Those builders are beginning to work through that land, and the evidence is that as time passes the supply of land will become more and more a relevant factor. There is a growing anxiety in the industry, and if the industry is to revive we must cope with this problem.

Mr. Michael Latham: Is my hon. Friend aware that a survey conducted by the House-Builders Federation dated 19th May illustrated that 85 per cent. of house builders considered that the lack of building land was likely to restrain their output to some extent?

Mr. Heseltine: That is the kind of comment that is made to me by constituents. I am grateful to my hon. Friend for reminding me of that survey.
A further step which the Government should now take is to give specific incentives to first-time buyers in the form of help with their deposits. The Government should use some of the funds available and should divert them to that desirable social end.
Furthermore, the Government should commit themselves wholeheartedly to the sale of council houses and flats. The Greater London Council is to be congratulated on its total commitment to this principle in the recent election campaigns. There has been a considerable response. I understand that 800 people have asked to be put on the list of those wishing to buy council houses. Such people should be positively encouraged with every incentive, and the GLC obviously is taking that line.
I should like to mention one area of confusion, which I hope the Secretary of State will clarify. There is a dual situation whereby, with the right hon. Gentleman's permission, a 30 per cent. discount can be granted off market value—and without such permission there is a 20 per cent. discount. It would help the situation if the right hon. Gentleman would announce that he will make a general disclaimer in regard to requests for approval. He should announce that it will be in the gift of local authorities to move to a 30 per cent. disclaimer without further permission being required. This is a significant way to


encourage sales. I believe that the facility of council house sales to tenants is the single most dramatic method by which to extend home ownership in the short term.
Such a policy would also have the effect on the part of those who become home owners to commit an increasing proportion of their income to improving and repairing those homes since they will have a direct personal involvement in them. It also means that local authorities and communities make a profit. [HON. MEMBERS: "Oh."] I know that it does not come easy to Labour Members to hear such things, but the figures of loss advanced by Mr. Bernard Kilroy have been said by Mr. Peter Sparling, the Chairman of the Leeds City Council Housing Committee, to be fallacious. The reason that Mr. Bernard Kilroy is wrong is that his assessments of the relative rates of increase in terms of rent and repairs are not based on actual historical calculations.
If Labour Members are saying that a profit will be earned more quickly if the council house is let to tenants, they are suggesting that the rents will go up faster than will the repair and management costs. One has only to look at the record of the Labour Party and at what has happened since they have been in power. A high rent policy is implicit in Mr. Kilroy's assumptions. The Labour Party will not be able to resist intervention in rate and rent policies. Therefore, Mr. Kilroy's suggestions do not stand examination.

Mr. Douglas-Mann: I am sorry to intervene yet again, but the hon. Gentleman referred to Mr. Kilroy's assumptions. Mr. Kilroy in his calculations worked out an assumption of about 10 per cent. annual increase in rents. If one examines the figures over a number of years in Leeds, one sees increases of 15 per cent., 12 per cent., 6 per cent., and 13 per cent. This can be seen from Table 6. That shows an increase substantially in excess of the assumptions made by Mr. Kilroy. Therefore, the hon. Gentleman's figures are totally misleading, because Leeds bases its figures on projections of figures which have not been realised. It is Mr. Kilroy's figures that are realistic.

Mr. Heseltine: The figures put out by Mr. Kilroy do not accord with the figures put out by Mr. Peter Sparling, Chairman of the Leeds City Council Housing Committee. This is not a subject for discussion across the Floor of the House. The fact is that for there to be a profit on a council house letting—which cannot take place in the first year because we understand that the subsidies are over £1,000—there has to be a relative change in the balance between rents and repairs. Rents must rise faster than repairs. As the repair bills have been rising at a rate of 15 per cent to 20 per cent. in the current year, rents will have to increase in order to improve the position of the State investment. It is an unlikely situation to put by way of hypothesis.
The next area which the Secretary of State should take as a target relates to the sale of new town assets. In case the Labour Party says that it is not prepared to consider a half-way house, I wish to say how pleased I was to see the Housing Corporation Press Release of 15th June because it showed that the City of London raised £35 million to make good the cuts in public expenditure imposed by this Government on housing associations.
I was delighted to hear that news. I have always believed that the savings of the British people, managed by the City of London, should be made available for housing. That is precisely what has happened. I remember in the last housing debate asking the Secretary of State for the Environment to encourage these moves, and I believe that the right hon. Gentleman has committed himself in principle. I hope that we shall hear no more from Labour Members against the concept of encouraging private sector investment in this way.
Why not go further, and encourage as many of the new towns as wish to do so to sell their freehold assets and thus raise substantial sums of money for a variety of purposes that it would be profitable to discuss? An obvious but important point contained in the Housing Corporation Press release is that it says that devices can be reached whereby a flow of private funds to the development and housing funds can be produced. I hope that the Secretary of State will deal with that in his housing review. The right hon. Gentleman should bring a more


dynamic approach to the planning procedures which, in terms of time taken, are making substantial contributions to the cost of new housing.
I should like the Secretary of State also to consider the statistics in the Housing and Construction Statistics, volume 20, for the fourth quarter of 1976. These show that it now takes between 19 and 26 months to complete a new house or flat in this country. That seems to be an inordinate period of time, and the Secretary of State should look into the matter. It means that resources are being committed over a long time and, because of the time taken, the cost of building new homes is rising dramatically.
I now wish to turn to the renting side of the problem. There are some 5 million tenants in local authority housing and that means that there must be a great deal of political concern. As has been established in earlier interventions, the Government are committed to increasing the proportion of rent to 50 per cent. of the housing cost by the end of the decade. We all want to know the Government's latest view on the matter. I believe that the Government will want to await publication of the housing review which is due next Tuesday. In these circumstances we shall look carefully to see whether the Government have, for electoral reasons, abandoned the pledge spelled out in Command Paper 6393. Certainly this or any Government will be forced by the circumstances of financial restraint to move in that direction and it would be intolerable to do that unless there were a number of other incentives surrounding that movement. There would have to be a determined attempt to sell—and I mean really sell—council houses to council tenants.
We should also expect to see increased publicity for rent rebate schemes that were introduced under the last Tory Administration, because it is a sadness to many hon. Members to find while doing their constituency casework that many people do not know their entitlements in this matter.
There would also have to be a move forward with the concept of a tenants' charter. There are a whole range of areas in which bureaucracy denies to tenants a proper rôle in the management of their estates. The management side

of the tenants' charter is probably the most important, because it should be possible to devolve a degree of responsibility and thus eliminate a certain amount of bureaucratic influence if tenants played a greater rôle. The Secretary of State should also encourage the experiments that are now being conducted by the GLC, where "homesteading" is becoming a new word in the domestic housing vocabulary. It is an admirable concept of self-help that should certainly be encouraged across the country.
I now wish to talk about private rented accommodation in which 2 million or 3 million people—often of the lowest income groups in society—find their homes. Everybody understands that this is the area in which the most acute problems are to be found. We have a number of suggestions that could be of help.
Whether one likes it or not, there are many empty properties, and while the present paraphernalia of the law remains as it is those houses will remain empty. The objective of those politicians who have a detached view of the matter must be to find solutions to the grave problems that must be overcome and to help that large number of people who do not live in the sort of housing for which we all wish. [Interruption.] The problem of the hon. Member for Salford, East is that he has a parrot cry for every sensible debate on any subject. One has only to mention a major national crisis affecting the lower end of the housing market and the hon. Member for Salford, East produces his parrot cry. We do not advocate conditions that would permit such a fringe of abuse as causes concern and does harm to an otherwise perfectly reasonable industry. We should not tolerate the reintroduction of the techniques that allowed such people as Rachman to earn such discredit.
This is a problem that concerns people on both sides and I should like to look now at what we can do to deal with it. The concept of a shorthold should be tried. We shall try it when we are in Government and I hope that the party opposite will not immediately indulge in yah-boo techniques of party politics to try to discredit the scheme before it has had a chance to work. We shall certainly introduce it, because it would be better for people to be allowed to enter into


fixed period leases on the clear understanding that at the end of the time fixed there would be no further commitment to letting. It would be a clear understanding between landlord and tenant. We should want to see duties imposed as much upon on the landlord as on the tenant but it should be a contract freely entered into by both sides. It should be given a chance to work.
The Secretary of State should also consider an extension of the Bromley scheme, whereby private institutions could be encouraged to build, for example, on local authority land—where the local authority produced the land—for open market rent. There should be a contract that all parties concerned should accept. It would not prejudice the political freedom of local authorities. The private provider of capital would, in fact, be using the savings of the life insurance companies and pension funds and should be allowed to charge an open market rent for the properties. If local or national Government intervened to prevent that open market rent there should be a right of compensation for those people who had invested. Nothing could be fairer than that. It means that there would be an opportunity to encourage home building together with an assurance that if the experiment did not work those savings that had been invested would not be put at risk.
The concept of the North Wiltshire scheme offers a real opportunity of partnership between the public and private sector and the Secretary of State should encourage it.
I also wish to put a personal point of view. We all understand that there is a real difficulty with private rented accommodation. There are good and bad landlords and good and bad tenants. With 2 million people involved there will always be that mixture of human beings. The question is how we shall deal with the situation. We should move to the sort of experiments that I have put forward and to which my party has been committed for some time. Other similar experiments have been put forward. I believe that we should set up a Select Committee of the House to monitor what is happening on the ground, to judge the facts and to help up to make future judgments. We cannot lightly allow 2

million to 3 million houses to continue declining as they are now doing because we cannot solve the differences between two political parties in trying to judge the issue.
The severity of the national economic crisis that now besets the country has been gravely worsened by the Government, and not only in national economic terms, because the Government have introduced specific measures that have harmed the house building and home owning industries. The Government's total reliance on the public sector has proved to be illusory, and they are doctrinally unsuited to changing direction and to putting their faith in the direction that we advocate—that is, home ownership and encouragement of the private market. That is the only option left and the sooner that we move in that direction the better.

5.19 p.m.

The Secretary of State for the Environment (Mr. Peter Shore): The last Supply Day debate on housing was just two months ago, on 21st April. I am therefore puzzled that the Opposition wish to return to this subject so soon. Before I heard the speech of the Opposition spokesman, the right hon. Member for Henley (Mr. Heseltine), I had, perhaps optimistically, assumed that he was returning to the subject in order to withdraw some of the more extravagant claims that he made on the last occasion about the total collapse of our housing policy, and that he wanted to take the opportunity of expressing some little satisfaction about the improvements in the housing prospect that are now opening up.
However, having listened to the hon. Gentleman's speech, I find that he has not brought anything before us on this occasion that he has not said before. I do not altogether complain of that because we must go over much of the same ground. The hon. Member for Henley went over rather familiar ground and made one or two points on which I shall comment shortly, but the most conspicuous point in his speech, bearing in mind that our last debate on housing was only two months ago, was the absence of any mention of the great improvement in housing prospects as a result of the further and most welcome reduction in the


mortgage interest rate from 1st July. This is the one major improvement since our last debate on housing and the hon. Gentleman said not a word about it. That gives some indication of his approach to housing.

Mr. Heseltine: Let me say how pleased I am that, after three years, the Government have got back to where they were when they took office.

Mr. Shore: It was rather grudging and a little late, but we got it in the end, and I thank the hon. Gentleman.
May I ask the hon. Gentleman that, when he is making strictures about the Community Land Act, he should think much harder about his future policy on land. It must be welcomed on both sides of the House that there has been a reduction and stabilisation in the price of land for housing in the past three years. When the Conservatives came to power in 1970, the price of a typical housing plot was about £908. By following reckless financial policies and through a lack of land control policies, that Government ensured that, by the second half of 1973, the cost of a typical plot of land had risen to £2,741—an increase of 200 per cent. in three years. By the end of last year, the average price had fallen to £1,879—a reduction of about a third in three years. Before closing his mind to the prospects and possibilities that have opened up most beneficially as a result of the Community Land Act, the hon. Gentleman should reflect in detail on what went wrong last time and see that it does not happen again.
The hon. Gentleman's remarks about the building industry were either sheer humbug or were based on misconceptions. No one could seriously argue that the imposition of a capital transfer tax and the possibility of a modest increase in direct labour organisation powers could have had a serious effect on the building industry. The reduction in overall demand has had an effect and there was a strange anomaly in the hon. Gentleman's speech. Whatever his enthusiasm for owner-occupation, the past three years, in which, as he properly recognised, there have been major economic problems, have seen a substantial increase in the level of public sector building. Without that, demand in the building industry would have been

noticeably lower and, with that lower demand, there would have been unemployment even higher than the unacceptable levels of today.
I wish to turn to some of the changes and some of the future possibilities in housing. The biggest single change since we last discussed the subject has been the fall in the mortgage interest rate. The reduction on 1st July will follow the 1 per cent. reduction on 1st May, and this reflects general decline in interest rates that has occurred since the December measures. This, in turn, is directly assisting private builders.
Looking back over the past three years, one of our most important successes has been our relative stabilisation of the flow of mortgage funds—in marked contrast to the chaos of feast and famine that we had under the last Conservative Government.

Mr. Nick Budgen: Is the right hon. Gentleman serious in saying that he has stabilised the money going into the building societies? They are wholly independent organisations.

Mr. Shore: I am not saying that we have a command relationship with the building societies, but during the difficulties of 1974—a period of total collapse in the private house building programme—when there was no mortgage money available, we offered £500 million to get things going again and entered into talks and an agreement on a continuing basis with the building societies to encourage them to build up reserves against inflows and outflows of money so that the situation that occurred in 1973 would not recur.
In the past year, during which there have been great upheavals in the money markets and a substantial outflow of funds, the stabilisation arrangements have turned out to be pretty satisfactory. Indeed, they have enabled the building socities to lend at a rate of £500 million a month in the second half of 1976—a period of great difficulty—compared with an average of £520 million a month in the first half of the year. That was quite remarkable when one considers that the inflow of funds dropped appallingly in the second half of the year.
Despite the fact that the societies have reduced their share rate to savers, there is a good flow of new receipts and they were


able to offer loans of £666 million in May compared with £509 million in March.
The average annual rate of starts in the private sector is, because of the measures that we have taken, holding fairly steady. It was 150,000 in 1975 and 155,000 in 1976. The builders' own forecast for this year is 145,000. There is growing confidence about the prospects for this year and even more about the prospects for next year. Certainly we are a long way from the collapse that hon. Members opposite were ghoulishly predicting in our November debate.
Turning to the prospects for building in the public rented sector, we made provision at the end of last year for 150,000 starts this year. Since then, we have been able substantially to restore the £57 million cut in the Housing Corporation's programme which I was pleased to hear the hon. Member for Henley welcome. The Corporation has been able to borrow £35 million from the financial institutions, and I hope that a further £15 million can be arranged later this year.
However, I am the first to admit that progress in public sector new housing so far this year has been disappointing and a little puzzling. It would appear that the moratorium we had to impose for a month last summer and the working out of an agreed programme for the stress and non-stress areas may have checked some of the momentum of local authority programmes. The wet spring may have played some part too. However, it is the local authorities and not the Department of the Environment that are responsible for erecting houses. As both I and my right hon. Friend the Minister for Housing and Construction mentioned in the last housing debate, we are becoming increasingly concerned that some Conservative district councils may be unnecessarily cutting back their programmes to figures well below those we had agreed for their areas.

Mr. Heseltine: Does the right hon. Gentleman agree that it is scandalous that, having imposed the most stringent public expenditure cuts we have seen, he now tries to pretend that it is Conservative authorities that bear responsibility for cutbacks? He will find when the figures appear that the cutbacks are spread between Conservative and Labour coun-

cils, unless he has deliberately distorted the flow of funds to ensure otherwise.

Mr. Shore: The hon. Gentleman is wrong about these cuts being the most stringent ever. We had to reduce planned new starts from 170,000, as being roughly, the figure at which they were running, to 150,000. I thought that the best way of handling that reduction was to cut back on the non-stress areas and to allow the stress areas, the areas of obvious housing shortage, especially rented housing, not to cut back their programmes. I deliberately arranged matters so that they would not have to cut their programmes. Having come to an agreement with those areas, we now find that a number of them are beginning to cut back upon the programmes that we had allotted and agreed with them.
It is no good the hon. Gentleman blinking this off. It is an important matter. I believe that we have to maintain a programme of the size that I have indicated. Leicester and Nottingham were two cases mentioned on the previous occasion. We have now the example of the GLC, which has announced that it is about to cut its programme by nearly a half by stopping all new building contracts in outer London, and outside London, too.

Mr. Heseltine: The Secretary of State is clearly aware that the GLC was elected to reduce that form of total commitment. Secondly, it was elected to concentrate resources on the inner city problem. That is the policy to which he has been paying lip service. Now that the GLC is doing it, he criticises it.

Mr. Shore: I shall return to the inner city problem, have no fear about that. I assure the House that we are determined to do all that we can to maintain the momentum of the housebuilding programme. I have already asked for reports from my Department's regional offices on the take-up of housebuilding allocations. I am ready to reallocate to willing authorities allocations not taken up elsewhere. We have already done this in the East Midlands region. Secondly, I have considered carefully reports about difficulties that some authorities have had in meeting the cost yardstick. I am pleased to tell the House that later this week I shall be announcing an increase in the yardstick, which will take especial


account of the difficulties that have been experienced in the Northern, North-West and Yorkshire and Humberside Regions.

Mr. Frank Allaun: Clearly I cannot support the Opposition in their criticism. They were foremost in demanding public expenditure cuts. Nevertheless, does my right hon. Friend agree that there have been serious cuts in the past year in council house building, improvements, mortgages and acquisition? Are there not grounds for restoring those cuts and going further than he has just announced?
Does my right hon. Friend agree that the Government have benefited in three ways? First, there has been the reduction in interest rates that has benefited the Treasury by millions. Secondly, there are a quarter of a million building workers who could be taken off the dole if this programme were embarked upon. Thirdly, there is the £2½ billion miscalculation that the Treasury made in estimating the public spending deficit. I put it to my right hon. Friend that he now has an opportunity to restore the serious cuts that were made last year.

Mr. Shore: I have indicated that I am anxious to sustain the housebuilding and expenditure programmes at the levels that have already been indicated. If I have to reallocate resources between authorities to achieve that, that is the first thing that I shall do. Secondly, my hon. Friend makes the point that as and when the economic situation eases, resources should be made available for increasing housing expenditure. That is something that I cannot anticipate, but I assure my hon. Friend that if resources become available the Department of the Environment, which I hope has some voice in these matters, will be doing its best to get a proper share.
I turn to a matter that is strictly relevant to what my hon. Friend has said—namely, the progress made in improving existing houses. As the House knows, we were able to increase the allocation under this programme by about £30 million only two months ago. It was that £30 million that was made available through the change in the financial situation that occurred along the lines that my hon. Friend indicated.

Mr. Arthur Jones: Is the right hon. Gentleman saying that capital resources for housing are now available

to the extent that he is prepared to allocate resources regardless of housing need to be established by the local authority?

Mr. Shore: I should not like to say that that is so regardless of housing need. On the contrary, I believe that there are considerable needs. I am saying that if authorities that have recently agreed to have substantial programmes do not take them up, I am prepared to reallocate—this is because we have made provision for such expenditure—to other authorities that have equal needs and are prepared to make greater progress in tackling them.
Opposition hon. Members have been making play of comparing improvement figures before the 1974 Act with those that came afterwards. They know that there were bound to be changes following the 1974 Act. That is because so much of the activity between 1969 and 1974 was the result of time-limited schemes. They were specifically designed as a fillip.
Opposition Members must also accept that the 1974 Act tightened conditions and followed closely the White Paper that they produced in June 1973. That White Paper was a notable exercise in self-criticism of the indulgence of the earlier scheme for housing improvement grants.
I have said on many occasions that the separate compartments for new building, rehabilitation and improvement in the public sector have not been satisfactory and may have led to distortions in local authority programmes. I have followed through that concern this year by permitting a much greater degree of virement, or switching, between budgets, than was allowed in the past.
I am pleased to tell the House that for 1978–79 we intend to put both new housebuilding and public sector improvement into one block allocation to give authorities greater freedom over how they meet their priorities in this important sector. A circular has already been discussed in detail with the local authority associations and it will be published at the end of the month.

Mr. Hugh Rossi: I am grateful to the right hon. Gentleman for the important advance that he has made. On the assumption that local authorities take up the invitation that he has given them in this new way of allocating money


and concentrating on improvement rather than new building, is he likely to go back on such authorities later and chide them for doing just that, because new house building figures in their areas have not been as attractive as they would have been if they had not availed themselves of the opportunity that is being given to them?

Mr. Shore: We shall have dialogue with the authorities concerned. We shall have considerable time for that dialogue. We are talking about 1978–79 and we have the greater part of a year to engage local authorities on the balance of their programmes. In our discussions we shall try to work out with them some generally agreed assessment of need and how it can best be met. Having made that general assessment, I shall not be chiding them. As the hon. Gentleman realises, I shall be giving them considerable freedom of movement within the blocks that we establish.
There is one last matter that I wish to draw to the attention of the House in making an up-to-date review of what has happened since our last housing debate. I wish to comment upon the first results that have come from the 1976 housing conditions survey. I hope that we shall have a full report before very long.
The first results indicate a welcome reduction in both the number of houses which are unfit and those which lack the basic amenities. In England and Wales there are now estimated to be about 900,000 unfit houses compared with 1¼ million five years ago. That is moderate progress. A further 1 million houses which are fit lack one or more of the basic amenities. In 1971 the comparable figure was 1·8 million. Therefore, we have reduced from 1·8 million to 1 million in five years.

Mr. Wyn Roberts: Can the right hon. Gentleman give the separate figure for unfit houses in Wales according to the 1976 survey?

Mr. Shore: I am sure that I could, but I shall leave it to my hon. Friend the Under-Secretary of State for Wales to mention that later.

Mr. Stephen Ross: Does the right hon. Gentleman intend to

deal with improvement grants and the increase in rateable value limits?

Mr. Shore: I do not intend to pursue that matter further now. The House will understand my reticence on some matters. I am about to turn to a subject which has been in the wings of our discussion for a considerable time.
As the House knows, we have undertaken a major review of housing. This started as a review of housing finance and was extended to cover housing policy more generally. The issues covered have been complex, and it has taken longer than we expected. I make no apologies for the fact that I felt it more important to try to get the review right than to get the document out in a hurry. No initiatives have been held up pending the review. Where I thought that progress could be made in advance of publication, I have made separate announcements—for example, in respect of the new housing investment programmes of local authorities. But I am now pleased to tell the House that the review will definitely be published next week. I hesitate about the particular day next week on which we shall release it. [HON. MEMBERS: "Friday night."] I assure hon. Members that that will not be so. The House would not expect me to reveal its contents now, but I wish to refer to the general approach in the report.
As I have steeped myself more and more in the arguments of the review, the more I have found myself convinced that there was more to be learned from the common sense, actual experience and preferences of our people than from the theoreticians and ideologists of housing policy. In particular, I have been influenced by three main considerations.
First, in the past 25 years we have progressively achieved an immense improvement in our housing situation This improvement is evidenced not only in the much higher quality of our housing stock but in its quantity. Although we still have a major problem to overcome, the housing situation is not worse, as many people are eager to suggest, but clearly and measurably better.
Governments of both parties have, in the last 25 years, built 7 million new houses and improved another 4·5 million. It is true that the average family in Britain is today better housed than it has ever


been and is better housed than the average family in many, if not most, countries in Western Europe.
The second consideration is that there is and will continue to be a substantial need to provide houses for rent, most of which can be provided only by local authorities and housing associations. Equally, there is a growing and natural demand for owner-occupation, which we fully support. Already 53 per cent. of households are owner-occupied. It is our task to help to meet both of these requirements.
Thirdly, there is a growing desire, wherever the choice is possible, to improve existing areas and homes rather than to engage in massive clearance programmes with all that they involve in terms of community disruption and dispersal.
Our housing policy is already firmly set along these lines and, provided that we can sustain our efforts, we can expect increasing success in the years ahead. While, therefore, we should seek to improve existing arrangements in every possible way—there are many suggestions as to how this can be achieved—it would be a great folly to embark upon a root and branch upheaval of policy to meet theoretical or ideological goals.

Mr. Frank Hooley: I have a great deal of sympathy with what my right hon. Friend has just said. But is not a new critical factor in the next 10 years the demographic factor of the sharp decline in the birth rate and, as we all know, the increasing numbers of elderly, retired people who may need special provision?

Mr. Shore: Those are exactly the kinds of consideration which should be in the forefront of the Government's mind and, indeed, in the minds of the authorities which provide housing.
The House will recognise from what I have said that I am strongly opposed to the doctrines and dogmas of many housing economists. Their basic viewpoint is that the great evil of Britain's post-war housing is the support given to the finance of housing through both subsidies to council tenants and tax relief to owner-occupiers. Their belief is that financial support in both sectors leads to waste and the misallocation of housing resources.

Therefore, they urge that rents should be increased and that mortgage tax relief should be reduced. I suspect that some of them are basically more upset about council subsidies than owner-occupiers' tax reliefs. Nevertheless, they believe that it is politically practical to punish the tenants only if at the same time they are ready to harm the owner-occupier.
My view is that they are entirely wrong to treat housing as though it was just another commercial service. They fail to recognise the social significance of housing both to the community and to the individual. Further, they fail to recognise the real connection between the price of housing and its supply. If we were to abandon general support for both tenants and owner-occupiers, I have no doubt that the progress that we have made and can continue to make in dealing with housing need would suffer an immense setback.
Certainly some changes are required in housing finance, but, on the basic doctrine of withdrawing support from both main sectors, I am totally unconvinced and shall not countenance any major change.

Mr. Douglas-Mann: I do not think that my right hon. Friend would suggest that I was more enthusiastic about increasing council rents than reducing mortgage tax relief. Does he agree that one effect of our system over recent years has been towards investment in both housing and industry? Has he had regard to the fact that over the last 16 years, while house prices have increased by five times, the Financial Times Ordinary Share Price Index has increased by only 11 per cent.? Does he therefore agree that this factor has caused investment to be channelled into an area which, desirable though it may be, has affected the viability of our economy because we are distorting the investment pattern in that way?

Mr. Shore: No, I do not agree at all. I know the argument and I have seen what has been said about it. I consider it to be a totally unproven assertion that, by providing reasonable housing through the medium of owner-occupation or, indeed, through local authority provision, we have somehow starved our industry of the resources necessary for it to perform more satisfactorily. I believe that to be an illusion.
Certainly, as I said, some changes are required in housing finance, but, on the basic doctrine of withdrawing support from both main sectors, I am totally unconvinced and shall not countenance any major change. From this, the House will recognise that I am equally opposed to the dogmatic approach of the Conservative Party. Its great and continuing errors are, first, to suppose that it is only the need for owner-occupation that needs to be met and, secondly, its continuing belief that the shortage of rented accommodation can somehow be dealt with by allowing market forces to dictate the price.
This was the error that the Conservatives committed in their 1957 Rent Act and it was the same basic error that they committed again in the Housing Finance Act 1972. There is, of course, a clear inconsistency in their approach to the two sectors. For while they hanker after market pricing as a solution to the problems of the rented sector, they are prepared to intervene in the owner-occupied sector with all kinds of additional subsidies.

Mr. Heseltine: Can the Secretary of State explain why we introduced rent rebates in both the public and the private sectors?

Mr. Shore: Easily. The rent rebate system is one of economic assistance which bases support on income. I am talking about the systems of general support which have the effect of making housing in both the private and public sectors cheaper and more obtainable than they would be otherwise. That is the point.

Mr. Heseltine: Surely the Secretary of State will agree that what one is doing is making housing, either rented or for sale, available to a larger number of people. For purchase, one subsidises the price and for rent one subsidies the rent. We did both.

Mr. Shore: The result of the hon. Member's policy was to bring up the level of council house rents to the level in the private sector. The alleged fair rent approach and the compulsory means test system was introduced to assist those tenants outside the particular income parameters. I understand that.

Mr. Rossi: The Secretary of State has just criticised the Housing Finance Act 1972. Does he agree that when he abolished some provisions and allowed local authorities to charge at their dis-? cretion, they went back to the levels suggested to them by the panels?

Mr. Shore: I would not necessarily accept that without checking.
Let me examine some aspects of the Conservative approach in more detail. It is a fundamentally lopsided approach. We have all read "The Right Approach", which contained many allusions to the need to increase rents in the public sector. There were also such allusions in the speeches by the hon. Members for Henley and for Hornsey (Mr. Rossi) in our last debate. But the House and the country still wait to hear firm details from the Opposition about their precise intentions.
I want to put only two questions to them. Do they intend to return to the formula of the 1972 Housing Finance Act and try to establish so-called fair rents in the public sector? We have not had an answer to that. If not, do they intend to fix rents by reference to total expenditure on housing revenue accounts? This seems to be what the hon. Member for Hornsey was suggesting when he spoke last time and referred to the leaked EDC report.

Mr. Heseltine: Before the Opposition can answer that the Government must say how far down the road they have gone towards implementing their own policy as outlined in the public expenditure White Paper.

Mr. Shore: A year ago when the hon. Member's predecessor sat on the Front Bench he told me to be bold and admit that in the coming year the general guidance and instruction of the Government to local housing authorities was that rents should go up by £1 a week. That was the assumption made from certain documents. I said that it was too early to judge these things. I was not disposed to accept such a conclusion. As the House knows, the increase for the year 1977–78 is not £1, as his predecessor predicted. A recommendation for an increase of 60p. was made. We judged that that was right under the circumstances, including the finance of housing


and the general counter-inflation policy. I do not intend to say more about that at this stage, although I shall say more in about a week's time.

Mr. Peter Hordern: Does the Secretary of State accept that in the public expenditure White Paper last year, the Government accepted a target of 50 per cent. on the cost of outgoings by 1978? Do the Government expect to achieve that which was described last November as a modest target?

Mr. Shore: I do not accept that that was a target; it was an indication. The crucial factor is what will happen to the level of interest rates and what will happen in the general context with the counter-inflation policy, the cost of living and so on. The hon. Member will have to accept that the situation is not as definite and formal as he chooses to judge it.
I now turn to another matter which has been raised in the House—the Conservative approach to new building in the public sector. I am very anxious to see authorities embarking—as so many have done—upon programmes of renewal as an alternative to wholesale demolition. Such an approach cannot be a complete alternative to new house building because some of the existing stock has to come down and the continuing upward trend in household formation. I do not know what the Opposition's approach is to new public sector house building. On the last occasion I challenged the hon. Member for Henley to say whether he intended to wind up new house building by local authorities on any substantial scale. There was no answer. My right hon. Friend the Minister for Housing and Construction has not received an answer to that question, either.
Although we do not have a clear policy from the Opposition we have the evidence from their colleagues at County Hall. There, the Tory leadership appears to be embarking upon policies which would represent a severe weakening of the GLC's rôle as a strategic housing authority for London. Its decision to stop all new building in London and outside London is very dangerous.
We all wish to see the inner areas of London and other cities rejuvenated—none more than I. Of course I am glad to

see what I believe would have happened in any event—a proper emphasis on London. I have repeatedly acknowledged that there are some parts of inner London that are sufficiently overcrowded that their housing problems can be solved only if houses are made available outside the inner areas. This was the view taken by the consultants who studied an area of Lambeth in great depth over a period of three years. Incidentally, the consultants were appointed by the right hon. Member for Worcester (Mr. Walker) when he was Secretary of State for the Environment.
The consultants stated:
We therefore propose a set of policies for 'balanced dispersal' out of Inner London. The objective is to help more low-income families who want to move out to do so. Since they cannot afford to buy, they need rented public housing. As most potential migrants do not want to move far, the bulk of this housing should, as far as possible, be in Outer London or in areas immediately beyond.
I fear that the policies emerging from County Hall will continue what the consultants called "the housing trap". Many people living in Lambeth and other inner city areas are anxious to move out to better conditions in outer London but, if they cannot afford owner-occupation, it is difficult for them to do so.
This is the last of perhaps a series of debates before the publication of the Green Paper. In our future debates, we shall all be helped by the wealth of material and analysis that the Green Paper and its supporting material contain. We shall be all the better for it. It is not that I believe that we shall not have great controversies in housing policy between the two sides of the House, but that we shall all do far better if we conduct that debate on the basis of far more information, and objective information, than has perhaps been available to us in the past.
Housing is a serious matter. More than perhaps any other aspect of social policy, it involves the welfare of the people of this country. I hope that that will be a consideration very much in our minds and that it will help to guide our future discussions.

6.1 p.m.

Mr. Wyn Roberts: I shall leave the bulk of the Secretary of State's remarks to the tender mercies of my hon.


Friend the Member for Hornsey (Mr. Rossi). The right hon. Gentleman's speech seemed to have a detached, academic air, hardly reflecting the feelings expressed about housing in most of our surgeries. I think all hon. Members will agree that about 60 per cent. of the cases we handle relate to housing.
The House will not be surprised if I confine myself to the housing situation in Wales, which is very grave and shows every sign of deteriorating still further. If our people are to be adequately housed, vigorous and sustained action will be required. I emphasise, as did my hon. Friend the Member for Henley (Mr. Heseltine), the word "sustained". It is difficult for us to estimate the number waiting for council houses, but I know that none of the 36 authorities in Wales has fewer than 1,000 applicants on its waiting list and that many have twice and three times that number.
Length of waiting lists is not a perfect guide, but it is the best indication pending a proper survey by the Government and local authorities, which is long overdue. On a conservative estimate, therefore, there are about 50,000 to 60,000 people in Wales waiting for houses.
Our housing stock in Wales is older than that of the rest of Great Britain. Nearly 25 per cent. of it was built before 1891, compared with 18 per cent. in Britain as a whole. Similarly, 20 per cent. was built between 1891 and 1918, as compared with 15 per cent. in Britain as a whole.
The age of the housing stock is reflected in the lack of amenity. There is a higher proportion of houses in Wales without fixed bath or shower, indoor toilet or hot water than in England or Scotland. The social survey report on the handicapped and impaired in Great Britain showed far higher percentages in Wales without access to amenities. For example, 35 per cent. were without exclusive use of hot water, fixed bath and toilet, compared with 26 per cent. in Great Britain as a whole.
All this clearly implies that the rate of new building should have been higher in Wales, but it has been consistently lower than in the rest of the country, with the solitary exception of building in 1975, which was an exceptional year, due to

exceptional reasons. Also, the Welsh share of United Kingdow housing expenditure should be increasing, but it is decreasing alarmingly, as my hon. Friend the Member for Pembroke (Mr. Edwards) pointed out in the Welsh Grand Committee on 10th March last year. The Secretary of State for Wales seems to have lost out badly somewhere and will eventually have to answer to the electorate.
New housing is desirable but it is expensive and we in Wales question whether the Government are absolutely right in present circumstances to give it as high a priority as they seem to do. It is certainly questionable whether they should be giving the present high priority to the acquisition of land by the Land Authority for Wales, to be used at some future time. Many argue that a higher priority should be given to rehabilitation, simply because Wales has so many older properties. About one Welsh home in six was declared unfit by the survey published in 1973. I hope that the results of the 1976 survey will show an improvement. If so, as the Secretary of State has led us to expect, that will help to show that the last Conservative Government were right to concentrate on improvement grants.
I have recently been impressed by the report on housing and land use in Cardiff entitled "Lost Property", produced by the Friends of the Earth, and by the report on homelessness in South Wales entitled "Insult to Injury", produced by Shelter and kindred organisations. I need hardly say that I do not agree with all the conclusions in those documents, but valuable work has been done.
As my hon. Friend the Member for Henley has said, many empty houses could be restored. Many more have been converted to offices but are not used as such at present and there is a great deal of vacant land in our towns and cities, much of it belonging to the authorities, which could be used to help to provide accommodation. We have in Wales more than 1,000 people in temporary accommodation. The figure has been growing throughout this decade.
I believe that it will grow still more if and when the Housing (Homeless Persons) Bill becomes law, because there is a great deal of hidden homelessness in the waiting lists. Many of us on this side are worried because that Bill lays


extra duties on the housing authorities without giving them additional resources. Representatives of the authorities I meet and of the authorities which have written to us have all expressed grave anxiety.
That Bill also threatens to create two tiers of council tenants, one more privileged than the other. If we are not careful, there is a strong possibility that these homeless families will become institutionalised in communal establishments financed by local housing authorities. That is surely not the kind of development that we wish to see, yet it appears to be inevitable unless we make more effective use of our resources.
All kinds of drastic legislative solutions are being offered. The National Empty Homes Campaign has been urging that houses should be requisitioned along the lines of the Bill that was introduced by the hon. Member for Salford, East (Mr. Allaun). I regret that he is not in the Chamber now, although he was present earlier. The campaign has recommended also that more money should be provided for municipalisation. Curiously, it has set its heart against reform of the Rent Acts to make it worth while for property owners to let their accommodation to those who are prepared to pay an economic rent for it. Such reform would be cheaper for the Government, more immediately effective in alleviating the pressures on local authorities, and more beneficial in that authorities could then concentrate more on needier families with low incomes. These are the people who appear to me to be going to lose out.
In housing, as elsewhere, we find that this Government's Socialist policies are failing. There is not enough money to maintain the council houses that we have or to build enough to meet the demand. I admit that the demand is incredible. In the 20 years to 1971 the population of Wales increased by just over 5 per cent. The number of households increased by 20 per cent. and the number of new houses increased by no less than 35 per cent., but housing waiting lists remain as long as ever.
I agree with my hon. Friend the Member for Henley that it looks as if the Government must turn for salvation in this area of policy, as in many others, to the private sector. Only by freeing the private sector to provide housing for rent, as well

as for purchase, on economic terms can the Government possibly provide enough accommodation to enable local authorities to care for those in genuine need who do not have adequate resources to provide for themselves. More Socialism in housing is not the answer. We cannot afford it, and neither can the Government. Neither will it work satisfactorily in practice.
There is no advantage in more Socialism to the people of Wales who have clearly expressed their preference for owner-occupation. We have 58 per cent. of homes owner-occupied compared with England's 53 per cent.
The provision of adequate housing is basically a practical problem. In Wales we need improvement grants on a generous scale if we are to maintain and improve our ageing housing stock. Also, we need a crash building programme that will last until the problem is solved. Maybe we shall have to depart from the Parker Morris standards, or perhaps build cheaper homes of the prefabricated variety or its modern equivalent.
The alternative is very unpleasant to say the least. The resentment of those on the waiting lists will grow, and so will the tension in homes that were intended for one family but are actually occupied by two. Such tension often leads to mothers ending up in mental hospitals and menfolk taking to violence. This is not an exaggeration, as those of us who hold surgeries know only too well. These are the harsh facts facing us in Wales. Something must be done, and done quickly. The home is rightly regarded as a basic right, but the way things are going it is being denied increasingly to an increasing number of people in Wales.

6.15 p.m.

Mr. Bruce Douglas-Mann: I agree with a great deal of what the hon. Member for Conway (Mr. Roberts) said about stress in Wales. This exists in a large number of parts of the country—perhaps nearly all. It is not confined to the inner cities.
I listened with great disappointment to the speeches from both Front Benches. I listened with greater disappointment to the speech of the Secretary of State than to that of the hon. Member for Henley (Mr. Heseltine), because I expect more


from my right hon. Friend. If the outcome of the housing finance review is to be as my right hon. Friend foreshadowed it this afternoon, we shall be left with what the late Anthony Crosland once called "the dog's breakfast of housing finance". The stress will be with us for many years to come, and we shall not succeed in solving our problems, because we shall have failed to tackle the problem of housing finance.
My right hon. Friend has taken a number of points against the Opposition this afternoon, and of course I accept that undoubtedly the position would have been a great deal worse had the Conservatives been in power. However, the actual achievements of this Labour Government in housing have been very disappointing.
If we project the 1977 figures for the first four months of this year, we find that we shall have about 120,000 starts in the public sector and about 124,000 in the private sector, making a total of about 244,000. In 1968 we had 394,000 starts. Not for a very long time have we had as low a combined total as we are likely to achieve in the current financial year. There are all sorts of reasons for this, but the fundamental reason is finance and the fact that 60 per cent. of the population is getting ill-directed subsidies. Because of this, we cannot afford to provide houses for those who really need them.
The figures for need provide scope for a great deal of argument. We all know that within our own areas there is a very acute need for substantial new building and house improvement. My own assessment is that the country needs about 5 million additional houses in the next 10 years. This means that we shall need to build 500,000 houses a year to get a reasonable standard of housing provision within that period. If we do not build at that rate, we shall perpetuate the hardship of which we are all aware.
We are not likely to achieve that figure with the present system of distribution of housing finance. In 1968, when we achieved nearly 400,000 houses a year, the pattern of distribution of housing finance was that we spent—at 1975 constant prices—£477 million on rent subsidies and £411 million on mortgage

relief. At the same time we spent £2,473 million on bricks and mortar. Therefore, we were spending nearly three times as much on bricks and mortar as we were on subsidies.
By 1976 the situation had changed completely. We spent £1,083 million on subsidising rents, £1,020 million on mortgage relief and £2,043 million on bricks and mortar. We were spending more on subsidies and mortgage relief than on building houses, whereas in 1968 we spent nearly three times as much on building as on subsidies and mortgage relief. This subsidy is so badly distributed�ž—

Mr. Ronald Atkins: Will my hon. Friend tell us to what extent this is dependent on differing interest charges?

Mr. Douglas-Mann: My hon. Friend is quite right to point out that the high level of interest rates involves a high rate of subsidy on local authority rents and in subsidising mortgages. Nevertheless, whatever the level of interest, the change of interest rates is only one cause of the maldistribution of these figures. As long as we continue to pay to someone with a large income, a large mortgage and a high marginal tax rate the tax relief for his mortgage, and hold down to totally uneconomic levels the rents of some local authority houses, we make the cost of building new houses so great that we cannot do the job.
If my right hon. Friend believes that he will do the job with the present system, I do not share his confidence. I do not believe that he will be able to manage the job with the present system. Unless he takes the opportunity provided by the housing finance review to review the whole system fundamentally, we shall continue with this decline in meeting the housing need which we are seeing in the present year.
I do not like to say such a thing about my Government, but if we do not take the opportunity provided by the housing finance review to make these changes we shall not be solving the problems of the homeless or of those who are in need, such as the families who come to my surgery saying "We are now expecting our second baby. We are still sharing the sitting room in my parents' house." A lady who came to me last week in


Merton has been on the council waiting list for 20 years. She now feels that she should have priority because she has great difficulty in getting up the stairs to her first-floor flat. People such as these should be given priority in the allocation of public money for housing.
The fact that these matters have not been adequately dealt with arises because 60 per cent. of us—most Members of the House, most of the population—are receiving from public funds assistance which many do not need. One of the effects of this system has been to distort the pattern of house prices and to make the solution of our housing difficulties so much more difficult.
Since 1960 house prices have increased by five and a half times. The retail price index has increased by three times. The Financial Times industrial ordinary share index increased from 319 in 1960 to 368 in 1976 to about 450 today. That is an increase of about 50 per cent., whereas all the other indices have increased by 300 per cent. or 500 per cent.
The hon. Member for Henley mentioned the effect of the withdrawal of tax relief for interest on mortgages over £25,000. He was correct in saying that there was a falling off in demand for houses in excess of £25,000. Those houses are being sold, but at a generally lower price level than prevailed previously. At present, with the existing mortgage structure, there is a fairly steady market up to £25,000. Above £25,000, the value for money is very much better. For £30,000, in many areas, it is possible to purchase a mansion. As it is not possible to get tax relief on the mortgage in excess of £25,000, the rate at which house prices increase above £25,000, depending on the standard of amenity, is much lower than it is below £25,000.
Of course, changes must be gradual. I do not know whether any evidence to the contrary effect has been submitted to the housing finance review. There may have been some from a few extremists, but I do not think that anybody is seriously suggesting that there should be a sudden withdrawal of mortgage tax relief or a sudden dramatic increase in the level of council rent. What is proposed is that we acknowledge that, by subsidising all mortgages irrespective of the length of time someone has had

a house, irrespective of the rate of tax to which the mortgagor is subject, irrespective of the value of money or of the amount of mortgage up to £25,000, we are subsidising an increase in house prices artificialy and stimulating demand beyond the level to which it would have risen without the subsidy. The evidence is there in the figures for house prices and in the pattern of investment over the past few years.
During the course of the past 15 years, the average proportion of personal wealth held in dwellings has doubled whereas holdings in company securities, on which we depend for a flourishing and healthy economy, has halved. At the same time, there has been a steadily increasing absorption of the annual flow of funds from financial institutions going in loans for house purchase, which have increased from 25 per cent. of loans in 1963 to 36 per cent. in 1973.
We are channelling far too much of our investment not into house construction or building but into house purchase. Only one out of every five house transactions is for a new house. We are subsidising the price of old houses so that everybody who owns a house, everybody who has got on to the escalator, is going steadily up and up. It is lovely for those of us who are on the escalator—we have our houses. Our houses are becoming more valuable each year that we live in them.
What we are really doing is benefiting our heirs. It will not help us. Each of us must go on having a house for the rest of his life. Sooner or later we shall die and then our children will inherit a capital sum the building up of which has been subsidised at public expense and which will have put the cost of housing out of the range of the minority.
Thirty per cent. of occupiers are council tenants, 53 per cent. are owner-occupiers. We are still leaving out of account the minority—the 17 per cent.—who are not assisted in any way. We are ensuring that they never will be effectively assisted in this way, because we are channelling so much public money to the assistance of those who do not really need it that it becomes uneconomic to deal with the problem of those who really need assistance.
I come now to more controversial ground for my hon. Friends. I accept


that, taking the country as a whole, local authority tenants are to a considerable extent paying too small a proportion of their income in rent. We are all, in general, paying too small a proportion of our income for the provision of housing. This is one of the few points on which I agreed with the hon. Member for Henley.
The proportion of income has been declining in recent years. In 1973, local authority rents in the South-East represented 97 per cent. of average manual earnings. They are now down to 7·9 per cent. The figure for the country as a whole was 8·4 per cent. It is now down to 7 per cent. Although that pattern may be desirable from the standpoint of achieving an incomes policy, from the point of view of a housing policy it will in the long term make it much more difficult to solve the problems.
Taking the simplest example, a family has no incentive to move from accommodation which is too large for them—accommodation which is nice but which is more needed by a young family than by a family whose children have grown up and left home. There should be an economic incentive to encourage a couple whose children have left home to move from their house with garden into a tower-block flat. Unfortunately, there are not enough houses with gardens to go round. Unless an economic incentive is provided, the only way to get people to move when they no longer need that type of accommodation is by compulsion. We all reject compulsion.
A system of economic incentives—a system of rent allowances making it possible for families to afford a house with garden when their children are young and with an incentive to move to a flat when their children leave home—would provide a much greater degree of housing satisfaction for local authority tenants than the present system.

Mr. Ronald Atkins: I am grateful to my hon. Friend for giving way to me a second time. I agree with him that there is a need for rented accommodation to which people who are occupying accommodation too big for them can move.
I do not follow my hon. Friend's point about the diminishing proportion

of family income being spent on housing. He will acknowledge that this will vary greatly from family to family. Usually, the lower the income the greater the amount spent on housing. Is not the general figure an improvement that he would expect to see with a developing society? It could equally be argued that the proportion of family income spent on food is diminishing.

Mr. Douglas-Mann: I agree that it is diminishing. It is desirable that the amount spent on necessities should diminish in a society which is getting wealthier. But we have not got much wealthier as a society since 1973. The proportion which we are spending is not sufficient. I do not know that there is any specific, desirable figure to say "That is the appropriate proportion to be spent on housing", but it is self-evident that we are not spending enough, though there is room for argument as to whether what is spent should come from public funds, from the rates or from increased rents, or mortgages.
But, while we believe in providing such a high proportion of the cost of every new house from public funds or rates, we shall not get the provision of enough houses to meet the needs of those who are in acute need. We are, in fact, subsidising those who have housing, whether from a local authority or on mortgage, and we are failing to do the job of meeting the needs of those who really need housing.
Of course, I accept that the changes which I believe are desirable must be gradual. Certainly, that is so as regards the mortgagor. Somebody who has undertaken the commitment of an existing mortgage should not have the tax relief taken away. What we should be doing is approaching it first of all on the basis of new mortgages. The initial relief should probably be the same, certainly for a first-time buyer—we should continue to assist people to buy their houses in the first place—but once someone has got over the initial burden of first-time purchase his housing costs as a proportion of his income gradually diminish as, and the extent to which he should continue to receive help from public funds should likewise diminish. This would enable us, if we were reducing the level of tax relief now given indiscriminately to everybody, to give greater help to the first-time buyer.
It would also enable us to give greater help to the person who at the present time is receiving no assistance at all, the elderly owner-occupier without a mortgage who, according to the Family Expenditure Survey figures, has in general a lower income than those who have mortgages and who badly needs assistance for repairs to maintain his property. We could give greater assistance to such people and to first-time buyers, and by some increase in local authority rents we could ensure that we were meeting the problems of a greater number of people. But it seems that these are not to be the solutions which my right hon. Friend will be proffering when the housing finance review comes out next week.
I fear that, in consequence, we shall not be getting an adequate solution and we shall not be tackling the problem as we should. However, although I criticise my right hon. Friend, after listening to the panaceas offered by the Opposition I can only thank God that it is my right hon. Friend who is in office and not the hon. Member for Henley and his hon. Friends. But there was one thing that I was glad to hear from the hon. Member for Henley. Although he spoke about the revival of the private sector and about various things which could be done to encourage the private landlord to come back into this field, I was very glad that he did not suggest that his party would withdraw security of tenure from furnished tenants. I hope that this will be made even clearer by Opposition spokesmen. The hon. Member for Hornsey (Mr. Rossi) made it clear in a television broadcast in which we both took part. I hope that it will be put beyond doubt that, whatever changes are made, the Opposition will not be taking that particular step.
The strategy of dealing with the private sector depends on landlords coming to accept that unless a property is capable of being sold—if it is capable of being sold, they will sell it—it can only be used for letting within the private sector. That is why I disagree with the arguments of the hon. Member for Kensington (Sir B. Rhys Williams) about shorthold, to which the hon. Member for Henley referred. As soon as there is one loophole—it does not matter what it is—as soon as there are opportunities for letting

free of the Rent Act, any landlord who is proposing to let at all will go for the market where he can let free from control.
But the confusion of the Opposition is that they seem to believe that in the absence of the Rent Act there would be a return to private investment in property for private renting. That cannot be the case, as is clear if we do the sums. Let us take a house which could be sold, say, for £10,000. The landlord invests that money, and it will bring him in £1,200 per annum gross. The cost to the purchaser of that house would be £10,000 which on mortgage at 11½ per cent. would be £1,150 a year, less tax relief of £380, which means that the actual cost to the purchaser of what would provide theland with £1,200 per annum is £770 a year—that is, about £15 a week. If, on the other hand, a tenant is paying about £15 a week to the landlord, the landlord receives £770 a year. After certain expenses of management, he will be left with £735 per annum, against the £1,200 that he could have by selling.
Quite apart from the Rent Act, and quite apart from any other factor, the economics—as a consequence of the tax relief on mortgages, and I am not arguing against tax relief—are that it is always more profitable to sell if somebody owns property which is capable of being either let or sold. He will gain more return by selling than by letting.

Mr. Heseltine: The hon. Gentleman will be aware of the very substantial funds flowing into investment in commercial lettings at well below the rates of interest to which he refers, even at high rates of interest on today's market price, simply because the institutions look to the inflation-proofing of their investments. If one could introduce into the residential market the sort of returns that one has in the commercial market, the figures would look dramatically different from the ones that the hon Gentleman is quoting.

Mr. Douglas-Mann: I accept what the hon. Gentleman says about commercial lettings, but in the commercial field there is not the differential of 35 per cent. tax relief on the cost. Consequently, no matter what


is done in the field of the Rent Acts, it will be preferable from the standpoint of the owner of property to sell it rather than to let it, irrespective of rent controls. I do not think that any changes that the hon. Member might introduce if he were in control could possibly change that pattern.

Mr. Heseltine: I think that we are not quite at one here. The fact is that the 35 per cent. differential to which the hon. Member refers exists today. Commercial investment by the institutions in commercal properties is taking place at very different rates of interest, through the normal open market, because, with rent reviews in seven years, they see an inflation-proofing of their investment.

Mr. Douglas-Mann: I accept that if the landlord retains the property, instead of having £1,200 a year coming in, it will provide increased rents for the future. But because of the tax differential a tenant cannot compete with a purchaser in the residential field. This does not apply in any other field—neither does the opportunity for the purchaser to borrow at 11½ per cent. If the commercial tenant wishes to borrow to purchase, he will have to borrow at 17 per cent. or 18 per cent. In general, any person renting commercial property who wishes to borrow money to purchase the freehold will have to borrow at a very much higher rate of interest than is available from a building society.

Mr. Heseltine: The commercial investor to whom I am referring does not have to borrow. I am speaking of the institutions, which have a massive inflow of funds to invest. There is no question of paying a high rate of interest. They have the money. They have to invest it. At the moment, they invest it in commercial property at lower rates of interest than the prevailing market rate. They will not do that in the residential market because there is no long-term inflation-proofing because of the Rent Act.

Mr. Douglas-Mann: Yes, I think that we have been talking at cross-purposes. The financial institution investing in commercial property for letting receives the rent from the tenant of that property. The tenant does not really face a choice of buying, because if he were to buy he would have to borrow in the market at a

higher rate of interest than would the house purchaser buying residential property. The tenant of commercial property, if he wished to buy as an alternative, would have to borrow at a far higher rate of interest, and, as both rent and interest would be tax-deductible, there would be no tax differential there. But there is a tax differential in the case of residential property as between sale and letting.
I hope that the hon. Gentleman will take this point into account since it is of fundamental importance. Irrespective of the changes which might be made in the Rent Act, he will not find the private investor coming back into this housing sector. There is not an analogy with commercial property because of the two factors which I have mentioned—the lower rate of interest at which the house purchaser can borrow and the tax relief which is available against mortgage interest but not against rent. In commercial property, tax relief is available also against rent.
The hon. Gentleman's other panacea was the sale of council houses, and here I come back to the article in Roof to which I referred in an intervention, the article by Mr. Bernard Kilroy. It was a well-argued article, soundly based upon the facts. [Interruption.] The hon. Gentleman can intervene later if he wishes to contradict me. Mr. Kilroy based his article on an analysis of figures in Leeds, and he contended that the effect of council house sales, although it gave a nice bargain to anyone who bought a public asset at 30 per cent. discount—that is all very fine for the happy individual who gets it—involves a loss to the local authority in a relatively short time, and it entails a substantial and increasing burden to the Exchequer because every time a house is sold on a mortgage and is then resold the tax relief on the mortgage interest runs again at a higher figure.
Mr. Kilroy's calculations were based on an assumed rent increase of only 10 per cent. If his assumed rent increases had been higher, the loss would have been even greater. In fact, the rent increases in Leeds during the periods prior to the effecting of the sales had ranged as follows: 18 per cent., 14 per cent., 11 per cent. and 14 per cent. However, as I say, Mr. Kilroy worked on the assumption


of 10 per cent., which should have shown a much lower loss to Leeds.
However, according to Mr. Kilroy's calculations on the basis of 10 per cent., rent increases, the loss to Leeds City Council was £1,785 on a post-war house and £7,905 on a modern house. Those were the losses to the local authority, and in addition we have the loss to the Exchequer.
The Opposition should realise that if they come to power and make the sale of council houses a matter of policy, they will find a backlash from the council estates and from the ratepayers. The rest of council house tenants will have to pay higher rents, the ratepayers will have to pay higher rates and the taxpayer will have to pay more taxes in order to provide a bonanza for those who buy council houses, who will be the better-off council tenants buying the nicer houses, leaving to the council only the poorest in the poorer houses. That is what will result from Tory philosophy if it is put into effect, and plainly that policy would be even more disastrous.
However, I conclude by saying to my right hon. Friend that I am extremely disappointed that it seems from what he said that the opportunities presented by the housing finance review are not to be taken and we shall continue to subsidise those who have houses at the expense of those who need them.

6.43 p.m.

Mr. Stephen Rass: I followed the speech of the hon. Member for Mitcham and Morden (Mr. Douglas-Mann) with great interest because he faced up to a number of rather unpalatable facts which hon. Members who have so far spoken have not recognised. I, too, am concerned about whether the housing finance review Green Paper which is to come out next week will go to the root of our problems.
I must take up with the hon. Gentleman the question of institutional finance. I ask him to look at what is happening today concerning agricultural land. I am certain that many institutions are investing money in land for which they will receive a very low return after paying £1,000 an acre or more. They may not receive more than 1 or 2 per cent. I have discovered over recent years that certain fashions come and go among the institutions.
Suddenly, the Prudential or the Pearl decides that it will go into agricultural land and everyone else follows suit. Then it is discovered that this is not producing a very good return and farmers cannot pay rents to cover money invested at the current rates. We saw this in 1974, when there were many sad circumstances, with people like Mr. Lyon coming down to Hampshire and paying £1,500 or £2,000 an acre for farmland. A year or so after, the whole thing went bust and many suffered.
However, the institutions have this money and they want to put it somewhere. They could put it into housing development, though not at present rates of interest. If we could bring the rate down to about 6 per cent., it could be shown that there was a return. I recall that my first mortgage was taken out at a rate of 3¾ per cent. Now, although we are talking about mortgage interest rates having come down, the rate is still over 10 per cent., which is a usury rate even today. Any rate over 7 per cent. is far too high.
I refer next to the figures that the hon. Member for Mitcham and Morden gave about the proportion of average income spent on rent. I think that he said that it was roughly 7 per cent. That is a very low figure in comparison with what is spent in other countries of the Western world, where it is far more like 20 per cent. I believe that it is 25 per cent. in New York. I understand that that is the figure insisted on for local authority housing in that city. Therefore, if we compare ourselves with what is paid for housing in the rest of the Western world we must conclude that our is still a very low figure. This is a matter on which we must educate the public and not dodge it all the time. People will have to recognise that they must contribute more and they will have to get their priorities right.
Young people are already having to do that. This is one of our great problems. When my children, or, I am sure, the children of other hon. Members, try to go off on their own and find accommodation, they have to pay anything from £20 to £30 a week, often for only a shared home. Yet apparently that is acceptable, although it represents a very high proportion of their income. As they get on in life and earn more and manage to buy or rent a home, the proportion they spend


on housing goes down. In my view, this is the wrong way round.
Already some building societies are discriminating against those who have higher mortgages. I gather that one building society—I have not checked whether it is mine, but I suspect that it is—has not reduced the rate for mortgages of over £11,000 but has reduced the rate for those with smaller mortgages. There is, therefore, some discrimination going on in the upper range of mortgages.
I listened with some sympathy to what the Secretary of State had to say because, in company with many others, I am deluged with the voluminous outpourings of many housing experts and, like the right hon. Gentleman, I am sure, when I read one argument going in one direction and another argument going in another, all from recognised experts, I should like to know who is right. I can only hope that the facts that come out in the housing finance review will help us there.
The right hon. Gentleman was right to point out that we are not so badly housed in this country as is often suggested. In company with other hon. Members I visited Japan in April, and I found that the Japanese think that we are extremely well-housed. They have a great problem coming upon them. They have not yet dealt with their land speculation problems, and farmers there, whose holdings usually run to only an acre or two, are having a field day. In Tokyo, people are having to pay £32,000 for 100 square metres of land and a one-room apartment costs anything up to £18,000, even with shared facilities. Admittedly, wages are higher in Japan—perhaps one and a half times or twice ours—but these are still large sums for people who want to buy. Municipal building is now essential for those who are retiring at age 55 or 60 because, when giving up their company house, and although in receipt of a lump sum payment, they do not have sufficient to buy a home for their old age. The Japanese, therefore, are watching with considerable interest what we are doing.
The point that the Secretary of State has ignored is that although we apparently have more habitable rooms per head of population than any other country in Europe we have the highest number of homeless families. Therefore, something must be badly wrong.

The hon. Member for Conway (Mr. Roberts) mentioned my Housing (Homeless Persons) Bill. He is a member of the Committee considering that Bill. It is an open secret that I believe that the Bill would have had a much easier passage if I had been able to incorporate provisions whereby more property would be brought on to the market. In my view the repeal of certain aspects of the Rent Act would help deal with homelessness. That is the conclusion to which one must come if we have so many habitable rooms and yet increasing numbers of homeless families.
I found little with which to disagree in the speech of the hon. Member for Henley (Mr. Heseltine), which contained nothing particularly new. However, when the hon. Gentleman talks about scrapping the Community Land Act I repeat what I have always said, that there is a great need for legislation to enable local authorities to play a rôle in land assembly. I wish to draw the hon. Gentleman's attention to the comments of the Royal Institute of Chartered Surveyers in a report on the question of inner cities. In paragraph 27, dealing with land assembly and renewal, it said:
Local authorities should be encouraged to use the appropriate legislation"—
—it might well be said that there is other legislation that could be used, and I would accept that, but the Community Land Act has been used and could be used in the future—
to assemble vacant land and to acquire obsolescent areas, where this is necessary to bring about renewal, and the current restrictions should be eased in those areas of stress where action is most urgent. Whilst profitability should be sought whenever possible, many of the areas concerned will produce little or no financial gain at least in the early years. A share in the ultimate profit from the development of such areas may best be obtained by authorities retaining a share of equity, or by one of the many variants of town centre partnerships.
It is worth noting that the chartered surveyors, the main operators in this field, see a rôle for the Community Land Act in land assembly.
I ask the hon. Gentleman to take care over the development land tax. I do not think that the Government have got it so far wrong. Any indication that the rates of DLT would be lowered by very much


would be a movement in the wrong direction. Perhaps the rates could go down a little to encourage sales, but if the Conservatives do away with the Community Land Act they must have some weapon to try to get land on to the market. When we sat through the debates on the Community Land Act we were told that it was to bring about positive planning.
Lord Barber, when Chancellor of the Exchequer, got near to the answer when he talked about introducing a land hoarding tax, and he was mistaken not to bring it in. A form of land value taxation should be imposed by local authorities when planning permission is given and when it is obvious that the development should go ahead. It would then be possible to cut out the middle person, whom most builders and developers very much dislike. The tax could be on a sliding scale, and in that way we could make sure that the land was developed. The Opposition should give attention to this matter.

Mr. Rossi: Does not the hon. Gentleman agree that there are thousands of acres of unused land in the hands of public authorities? If we are talking of bringing that land into use, perhaps we should divert our attention to shaking it out of public authorities.

Mr. Ross: I agree. We have had many debates on housing and the construction industry in which we have agreed that that is one of the matters to which local authorities should now be devoting their attention. They should have joint partnership schemes with local developers. The more we can do to encourage such schemes, the better.
We have gone through the whole question of what is the right policy on the sale of council houses, and I do not want to go through it again. However, I must warn that we could have a surplus of owner-occupation if we are not careful. In our deliberations on the Housing (Homeless Persons) Bill, we have learned that the number of repossessions for failure to keep up mortgage payments have continued to increase. With the rate of interest at 10½ per cent., owner-occupiers still have large sums of money to find.
I can remember the housing slump in 1951, when, particularly in my con-

stituency, and particularly for guest houses, many house-owners found that their mortgage was more than the property was worth. It took me nine months to sell the property that I had then, and I had to take a substantial loss, which took a long time to get over. Therefore, owner-occupation is not a panacea. People may again find themselves faced with difficulty in selling property. Nothing is worse than for a person to be unable to rent when he moves to a new district and to be committed to buying a property while owning another that he cannot sell. That can lead to desperation. I am happy to see local authorities selling houses where the essential conditions are met, and at a discount, but the matter should be left, if possible, to local authorities to decide.
I wish to deal shortly with some matters that I believe would help in the present situation, though I think that it is unlikely that I shall succeed in persuading the Government to examine them. First, I should like them to go for short, fixed-term leasing. I see nothing wrong in my agreeing to lease from someone who may wish to go abroad for a time or who, perhaps, has two houses and wishes temporarily to let one. Why should I not agree with him the rent and the term of years of the lease, perhaps with three years as the maximum? We could then go to a person who is recognised in housing matters—perhaps a rent officer—who could explain to me what I was letting myself in for as the tenant and that at the end of the agreed period I should have to leave. If such an agreement is registered with the rent officer or someone else, it should be clearly seen to be a short fixed-term lease. I see no reason why that should not be permitted.
Secondly, I should like to see long-term leases entered into in both public and private sectors. I am not trying to move away from security of tenure, which I wish to maintain, except for the short-term lease. I should like local authorities to lease council houses to their tenants at fixed rents for fixed terms of 10 years or more, with the tenants taking over considerable responsibilities for maintenance. I see no reason why we should not have such provisions, similar to those in the Landlord and Tenant Act 1954 applying to business tenancies. The land-


lord could repossess only for redevelopment or to let to a member of his own family, or for his own occupation. If a new lease could not be agreed, a court could fix the terms and the rent.
Thirdly, I am sorry to disagree with the hon. Member for Mitcham and Morden, but I should amend the Rent Act 1974 to release furnished accommodation outside London and other particular stress areas that the Secretary of State may from time to time wish to include in its provisions. I have never thought that there were grounds for bringing furnished accommodation in the provinces within the Act. It was a great mistake. I accept that there was good reason in London, but why not allow people freely to let furnished accommodation in the provinces? High rents were not being charged, and such letting was helping to meet housing problems and was helping the social services, amongst others. I also ask the Secretary of State urgently to raise the existing rateable value limits for improvement grants.

Mr. Rossi: Is the hon. Gentleman aware that during the passage of the Rent Act 1974 the Conservatives sought to make an amendment whereby the Secretary of State would have had the power to exclude from the operation of the Act areas depending upon supply and demand? Unfortunately, the Liberal Member on that Committee would not support us, and therefore the amendment was lost and we could not do the things that the hon. Gentleman is now advocating.

Mr. Ross: I realise that the hon. Gentleman wished to get that on the record. He has mentioned it to me many times and I have told him that I did not agree with the action of my colleague on that particular occasion.

The Minister for Housing and Construction (Mr. Reginald Freeson): Before the advent of the present Labour Government I saw the previous Minister responsible for housing, when there was no Rent Act on the statute book, to propose such limited action in designated stress areas. The proposal was rejected by Ministers then in the Department of the Environment.

Mr. Ross: That comes back to the point made by the hon. Member for Henley in talking about a Select Committee for housing. The right hon. Gentleman has now reinforced the case. I am sure that if we could establish such a Select Committee we could get a lot of agreement across the Floor of the House on subjects such as furnished accommodation in the provinces.
I welcome the forthcoming circular on the better use of vacant and under-occupied housing. If we are prepared to give greater freedom to the private owner or landlord to let, we can be tough with him if he does not take full advantage of the opportunities available to him. I could not go along with compulsory requisition or double rating unless landlords first had the opportunity to use their property to the best advantage. If we gave them that opportunity and they did not take advantage of it, we would then be entitled to hit them hard.
I would like to see far more activity by local authorities in the provision of housing advice and of accommodation agencies where appropriate. I believe that they could do a great deal in that direction. Some authorities already set a good example, but many do not follow.
In the longer term we must try to bring back institutional finance into private housing, without disturbing security of tenure. To do so will mean allowing rents to rise to sensible levels so as to ensure a reasonable return on finance invested. That problem must be faced, and the sooner the better. It is time that we got our priorities right and moved forward to ways in which we restrict subsidies to those who really need help and not simply apply them to bricks and mortar.

7.02 p.m.

The Under Secretary of State for Wales (Mr. Alec Jones): I intervene briefly because the subject of the debate is housing in Wales as well as in England, and I believe that some of the information I have to give may help other hon. Members who may wish to contribute later.
Many hon. Members on previous occasions have complained to us about the inadequacy of the provision for housing in Wales in the public expenditure White Paper. I must confess that I have


not always been happy with it myself. What worries me more at this time is that the returns now received indicate that in 1976–77 authorities were unable to spend the provision which was made for them. The exact amount is not yet known, but all the evidence shows that it will be very substantial in relation to the total provision.
That is paradoxical at this time, because there is no doubt that we have a housing need in Wales. Even the local authorities themselves are constantly stressing that fact. Yet they did not spend their allocations for last year. When, in the middle of last year, I was able to offer additional allocations for improvements and acquisitions—and we all know the importance of improvements in Welsh housing—11 authorities declined the offer and 14 authorities similarly declined the offer of an additional allocation for lending for house purchase.
The total capital investment in local authority housing programmes in 1976–77 was over £113 million. For 1977–78, because of the general economic constraints, we were able to allocate only £96·7 million, representing a further decline in the capital investment capability of our local authorities. Naturally, I was disappointed at the reduction, especially as I am still sure that Welsh authorities have the ability to expand their programmes from the levels to which circumstances have depressed them.
In the circumstances, I am pleased to be able to announce that an extra £11½2 million is now available for allocation for housing in Wales in 1977–78. This has been made possible partly because a fall in interest rates has permitted reduced provision to be made for housing subsidies in 1977–78, partly because slum clearance and other small items of housing expenditure are to be brought within local authorities' block allocations for 1977–78, and partly because certain contingency reserves are now to be released.
Of the total, my right hon. and learned Friend the Secretary of State for Wales proposes to allocate £3·9 million to local authority lending for house purchase—an area in which I have received particularly strong representations—while £2·7 million will be for slum clearance. The remaining £4·6 million will be applied to new building, improvement and rehabili-

tation schemes, acquisitions and other housing investment. Local authorities will be informed of their individual allocations this week.

Mr. Nicholas Edwards: The hon. Gentleman has told us about local authorities not taking up their allocations, and he has made the point before at Question Time. Presumably he has made inquiries. Can he tell us the reasons given by the majority of local authorities for this situation and give an indication whether there is any particular geographical distribution of the authorities, or of other factors which might be common to them?

Mr. Jones: I am coming to that point and to what we are proposing to do about it. The situation in which we found ourselves at the end of 1976–77, with this considerable underspend, clearly needs investigating before we can talk with a degree of certainty about the adequacy or otherwise of provision for future years. We have had preliminary reports from local authorities, all involving a variety of different reasons. Some of the reasons given by authority contradict those given by authority. That is not making my task any easier.
Because we are trying to get down to the root causes of the underspend in order to prevent it from occurring again, and to ensure that if there is an underspend of money allocated to local authority A we can transfer it to other authorities with perhaps even greater need, my right hon. and learned Friend has invited the Council for the Principality to join with the Welsh Office in a working party to investigate and report on the reasons why the housing provision for Wales in 1976–77 was underspent and to make recommendations for future arrangements to ensure the most effective use of the available provisions.
Some local authorities have indicated that the extremely wet weather of last autumn was a factor, but I would have thought that if it was a factor it would have affected all local authorities since the rain fell fairly generously on sinners and innocents alike. One cannot say that it applied to North, East, South or West Wales or to the valleys as opposed to the towns. The underspend seems to have been fairly general in almost all the local authorities. It is because of that factor


and the need to get down to the underlying roots of the problem that we have set up the working group. We want it to report as early as possible with a view to realiocations being made if that proves necessary or desirable at the end of the day.

Mr. Wyn Roberts: The hon. Gentleman will recall that the Secretary of State announced on 10th March last year in the Welsh Grand Committee that an extra £20 million to £30 million would be available for housing in Wales. Could it be that one of the reasons why the money was not all taken up was that the right hon. and learned Gentleman was rather late in announcing its availability?

Mr. Jones: I cannot accept or believe that as a possible explanation, since the announcement was made before the beginning of the financial year and before the time at which local authorities have on many occasions been given their allocations for the following year. We are trying to find the causes of the under-spend.

Mr. D. E. Thomas: In drawing up with the Council for the Principality the terms of reference for the working party, will the hon. Gentleman consider the effect of his Department's stop-go policies on the take-up by local authorities of available funds—for example, on mortgage lending, where the moratorium which he placed had an effect on take-up later when suddenly, under the carpet, he found an extra £2 million to allocate for mortgage lending?

Mr. Jones: I do not exclude the examination of anything. If local authorities feel that there is something which the Welsh Office has done but should not have done, I shall seek to correct the situation.
The terms of reference of the working party are to examine and report on the reasons why the housing provision for Wales in 1976–77 was underspent, and to make recommendations for further arrangements to ensure the most effective use of the available provisions. I intend that the working party shall, if possible, tell us the reasons for the underspend and how we can prevent it in future and ensure that all the money allocated for housing is used to meet the need.

Mr. Heseltine: Can the hon. Gentleman say whether the under-spend is taking place in Labour-controlled authorities and non-Labour-controlled authorities?

Mr. Jones: The evidence is that the underspend is like the rain: it is falling all over the Principality. I am sure that that pleases the hon. Gentleman.

Mr. Heseltine: That shows what absolute nonsense was the Secretary of State's statement that the cut-back was in Conservative authorities in England.

Mr. Jones: All I am defending and all I am answering for is the situation in Wales. The hon. Gentleman cannot draw the conclusion that what automatically applies in Wales applies in England. I should not have supported some of the behaviour of the newly-appointed authorities in London had in occurred in the Principality.
The hon. Member for Conway (Mr. Roberts) asked particularly about the housing condition survey.

Mr. Leo Abse: Will my hon. Friend note that, whatever blemishes there may be on local authorities throughout Wales for not spending available money, they do not apply to the Cwmbran New Town Development Corporation? All the money available is being spent. I trust, therefore, that very shortly we shall hear about the designated area so that the corporation may continue with its work. No working committee needs to be set up for the Cwmbran New Town Development Corporation.

Mr. Jones: I do not quite know how that comes into this discussion, but, as I know that my hon. Friend is pressed on matters concerning Cwmbran, may I say that we are actively discussing the report of the inspector and expect to make an announcement in the immediate future. My hon. Friend knows that it is now being worked on. Perhaps I had better skip over the question of blemishes on local authorities before I criticise some bodies about which I do not know much, namely, the English local authorities.
The housing condition survey commenced in 1976 and it is now virtually complete. Some last-minute analyses have to be carried out. We propose to


publish the details as soon as possible. However, may I give the hon. Member for Conway the general picture—and genuinely I have no further information to give him. The number of unfit houses in Wales in 1973 was 147,000. The survey seems to indicate that the number is down to 100,000. I am sure that everyone is grateful for that.
It may be of advantage to hon. Members to know that 15 per cent, of the new block allocation intended for new house building could be used for improvement works, but if local authorities wish to spend more they can make representations to the Welsh Office. Ten local authorities have requested permission to spend more than 15 per cent, on improvement. Eight of the requests have been granted, and two are still under consideration. We are therefore trying to devise a housing policy in accordance with the needs of Wales as expressed to us by the local authorities in Wales.
The hon. Member said that new housing was desirable. I was pleased that the sinner had repented on the road to Damascus, or wherever he has been in the last few years, because he said that the rate of house building should have been higher. I remind him that in the last year during which his Government had responsibility in Wales 3,247 houses were completed in the public sector. If we had continued with that rate of house building in the public sector, 12,000 families in Wales now living in new houses would, but for our action, have remained on the waiting list.

7.16 p.m.

Mr. Nick Budgen: I suppose that throughout our recent history one of the great appeals of the Labour Party as been that it is thought to be more concerned than any other party about high unemployment. Therefore, the Labour Party must be appalled at the fact that nearly 250,000 housing industry workers are now unemployed.
It must be the Government's overriding objective, in relation to housing and construction generally, to reduce that level of unemployment without reflation. I underline the words "without reflation". For the Labour Party, above all else, should realise that those people represent the weakest sec-

tions of the community. It is as a bricklayer's mate, plumber's mate, or general labourer on a housing site that a man with no skills customarily gets a job; or when a man comes out of prison it is often to a building site that he goes; or when a man comes from, say, Jamaica to join his family in Wolverhampton he may well find that he is, at least temporarily, employed on a building site. Therefore, it is those sections of the community, to whom the Labour Party customarily has directed its compassion, who most of all are being disadvantaged by the situation in the housing industry.
The housing industry has always been a cyclical industry. It has always been subject to political changes which are reflected in the social composition of the majorities in the House and in the way in which the economy works. Since 1971 the housing industry has been hit harder than any other. I shall not name, as I have often done in the House, the Acts which have had a disadvantageous effect on the housing industry.
The consequence of these frequent changes of policy is that the entrepreneur who builds houses, particularly spec houses, to survive knows that the only capacity in which he dare employ a man is as a labour only sub-contractor. Directly to employ sombody is to run the risk that when the cycle turns against him he may, unhappily, have to lay off the man and, under current legislation, pay a great deal of compensation, apart from running the risk of involving himself in labour troubles because the work force must contract.
Therefore, the only way in which the necessary flexibility may be retained in this inevitably cyclical industry is to employ labour only sub-contractors. That is the way in which the weakest people traditionally have found work. They are being driven in great hordes by the 714 certificate procedure to be dependent not, as they would wish, on their own endeavour but on the taxpayer. The practical compassion of the Labour Party in attempting to reduce unemployment without reflation should be directed towards finding some honourable way by which the 714 certificate procedure may be forgotten.
I do not want the certificates to be abolished. I am, I hope, enough of a practical politician to realise that the 714


certificates are vital to the present alliance between the Labour Party and the Trades Union Congress. Let us call them 214 certificates, but let us have no conditions attached. Perhaps in a roundabout way we can thereby abolish them.
I join my hon. Friend the Member for Henley (Mr. Heseltine) in supporting the Government's proclaimed policy of higher rents in the council sector. It is a most courageous reversal of the Labour Party's previous policy, and we on the Conservative Benches much applaud it. But it is also consistent with what I believe ought to be the Government's central objective of reducing unemployment, because one of the causes of unemployment in this country is the immobility of labour.
If we charge council tenants something slowly approachng a more economic rent—subject to generous rent rebates—we shall encourage some people to buy their council houses. As my hon. Friend said——

Mr. D. E. Thomas: The major problem with rent rebates is the low take-up. The official figures indicate a take-up of 70 per cent. Other surveys in specific areas indicate a take-up as low as 30 per cent. If we rely on a high rent input, we have to improve the take-up position of rent rebates.

Mr. Budgen: It is not for the Government to improve the take-up position. Application for a rent rebate is a voluntary matter for the tenant. I agree that it is right that the information should be made available and, indeed, that a proper advertising scheme should be undertaken by the Government of the day, but the crucial decision has to be taken by the tenant. He is the person who decides whether to apply. I agree, however, with the hon. Member for Merioneth (Mr. Thomas) that it is important that all the proper administrative steps should be taken by whatever Government introduce any form of movement towards economic rents in the council sector.
The consequence of such a move will be to encourage the better-off tenants sometimes to buy their own council houses, but sometimes also to buy new homes. Here I reintroduce the terrible indictment of the Government that a quarter of a million construction workers are unemployed. Some of them might

now have been employed in building homes for the richer people who leave the council sector. But it will also mean that houses will become vacant for those who are in real need. It will mean that houses will be vacant for those whose jobs take them around the country. The man who has to go to Dundee temporarily to work on an oil rig will find that there is a vacant council house for him to occupy.

Mr. Ronald Atkins: How will the selling of council houses, as the hon. Member is recommending, help the supply of rented accommodation?

Mr. Budgen: It depends on how many people buy the council houses. What I am saying is that, if rents are increased, some people will wish to buy their own council house. Others will wish to move and buy in the private sector. When people move and buy in the private sector, a vast number of council houses, I contend, will be released. I contend that those released houses could then be used in part by peripatetic workers and in part also by those in real need.
The increase in council rents, which I applaud as a change in Government policy, will also have a useful effect in further reducing the public sector borrowing requirement, which is the single most important factor in deciding interest rates. As the Secretary of State was indicating in the earlier part of the debate, interest rates have a crucial effect upon mortgage rates. A reduction in public expenditure might also lead to a reduction in taxation, which again would lead to an increase in demand for houses by private purchasers.
The Secretary of State proclaimed the fact that mortgage interest rates had come down from their all-time high of last winter, but he did not sketch in the general economic climate within which these slightly reduced interest rates obtain. Since last autumn the Government have pursued a policy of very tight money. The money supply, with the sole exception of the month of April this year, has increased at a very slow rate. The Government are also to be congratulated in having cut public expenditure very hard in the last six months. These two factors have allowed interest rates to fall back. But other parts of the Government's general economic strategy are


wholly unfriendly to the provision of housing.
The Government's first priority is to give every advantage to exporting, particularly to the exporting of industrial goods. And so it is that the Government, through their agent the Bank of England, are intervening in the foreign exchange markets to hold down the value of the sterling exchange rate. The strategy, of course, is well known. It is so that, as North Sea oil comes in in great quantities this year and next year, and as we move towards its high point in 1981, the balance of payments will be seen to be in massive surplus. We remember the old days when a deficit on the balance of payments was a symptom of inflation. Next the Government will say "We have masked the symptom; we must have cured the disease." There will then be an excuse for a massive reflation, which the Government hope will help them to bribe the electorate at the next General Election.
The housing industry is paying a price for this, because what is good for exporters is bad for importers—and the housing industry is a massive importer, in particular of wood. Wood is being held at a figure which is far more expensive than it ought to be. Food also is being held at a more expensive figure, for this reason and for others, than it ought to be, as a consequence of the Government making sterling cheaper than it ought to be.
The Secretary of State said nothing about wage control. Many of the people who would wish either to buy a house or to buy a better house—thereby trading up and thus releasing another house—cannot do so because of wage control. Wage control has been particularly slanted against those who traditionally move up the private housing ladder.
While the Secretary of State is right to point to the important effect that reduced mortgage interest rates have upon the housing market, he does not fairly point to those other ways in which the Government are rigging the economy for political reasons and adversely affecting the housing market, particularly the private housing market. The fact is that the basic problem in private housing today is that the builder cannot build homes at a price that the purchaser can afford to pay.

7.29 p.m.

Mr. John Ovenden: It is not my intention to follow the points made by the hon. Member for Wolver-hampton, South-West (Mr. Budgen), but I think that his remark concerning the sale of council houses, and encouraging people to leave the public housing sector, revealed the sort of confusion that has remained on the Conservative Benches on this issue. I fail entirely to see how offering people council houses at 20 per cent, or 30 per cent, discount, as his hon. Friend the Member for Henley (Mr. Heseltine) advocates, can possibly free houses in the public sector. I shall be returning later to the subject of the sale of council houses, and perhaps we can try to throw some light on it at that stage.
The speech of the hon. Member for Wolverhampton, South-West was somewhat more imaginative than that of the hon. Member for Henley, who trotted out another dose of Tory housing doctrine. He went back on the usual treadmill and tried to drive another wedge between the council tenant and the home-owner by seeking to simplify the argument between the public and private sectors.
No Labour Member wishes to discourage anybody from purchasing his own home. Indeed, many Labour Members have pushed for policies to encourage people to buy their own homes. It is naïve of Conservatives to try to protend that we can solve our housing problem solely through the private sector. I recommend those hon. Gentlemen to read the evidence produced by Shelter, which shows that there is an acute shortage of rented housing not in the stress areas but throughout the country. Evidence has been produced to show that those who are in most serious housing difficulties can be helped only in the public sector. The cut-backs of which the Conservative Government were guilty in their last period of office—and they have committed themselves to similar cuts in their next period of office—were a disaster, because they hit the people who suffer most.
Labour Governments have recognised that both sectors of the housing market have a rôle to play. Our record in either sector bears comparison with the record of the Conservative Government. There has certainly been equality of


treatment between the two sectors under recent Conservative Governments, namely, equality in sharing out disaster. The record of the Tories between 1970 and 1974 is a bad one whether one takes the public or the private sector. In the public sector, in the period 1970–73 there was a decline in the number of starts from 153,000 to 112,000—a complete collapse. In the private sector in the heyday of Toryism in 1973, the Conservatives managed to build or make starts on 215,000 houses. What a great pity they could not sell them. The young owner-occupier was hit hard at that time by Tory policies. He was virtually priced out of the market by the then Government, who in a period of two years allowed house prices to double and let mortgage rates shoot up. It is little use building houses at that level if people cannot afford to buy them. The Labour Government had to step in to buy up those houses and to take them into the public sector. That was the record of disaster of the last Tory Government.
I do not want to dwell too long on that sorry story, but that is the record. We have not heard one word from Conservatives in this debate that implies any change of direction in the policies pursued in 1970–74. If they are ever -re-elected and seek to adopt similar policies, we shall witness the same disasters again.
We heard little new from the hon. Member for Henley, apart from some talk about reform of the Rent Acts and a few make-weight suggestions, including the abandonment of the Community Land Act. However, when challenged the hon. Gentleman backtracked and said that there would still be a development land tax in some form or other. Therefore, that tax will still exist, although the Tories intend to remove the powers held by local authorities under the Community Land Act. I fail to see how that idea will build one new house or will make any contribution to a solution of housing problems.
The other Tory ploy involves the sale of council houses. That, too, makes no contribution to solving our housing problem, and it will certainly not help those who are in the most desperate housing need. Indeed, it will make their plight worse than ever.
The hon. Member for Henley committed himself to the fact that the next Conservative Government will reduce the level of public sector house building. I am glad that the hon. Gentleman was so forthcoming. In an earlier housing debate in this Chamber he was not so forthcoming. He was very much more shy and reticent. I am glad that he has now come clean and said that the Tory Party wants to reduce that figure. Perhaps before the debate concludes he will give the House an idea of the figure that the Tories have in mind. Does he envisage a figure of 100,000 or one as low as 50,000? Perhaps he does not wish to be precise, but he should give us a general outlines of Tory policy in that regard.
I believe that public sector house building has declined much too greatly already. Since the middle of last year, we have witnessed a serious decline in public sector starts. I was pleased to see a small recent upsurge in the figure, which is a chink of light, and is welcome, but I am not as optimistic as are my Front Bench colleagues about general prospects. In the last housing debate, the Secretary of State for the Environment spoke optimistically of 150,000 starts in the public sector. I find it difficult to go along with that figure when we see that in the first four months of this year the total starts were only 37,500. That gives no cause for optimism about a figure of 150,000 public sector starts for the year as a whole.
The present situation is that the starts in those first four months have been about 60 per cent, below last year's figure. A reduction has been imposed at the behest of the Treasury. It can be fairly claimed that there was a decline in housing starts in progress in the public sector before those Treasury controls were imposed, and indeed that those controls have had the effect of overkill. We have succeeded in forcing public sector housing down to a dangerous level. We must bring about a reversal of that policy.
I see no economic justification for cutbacks in the public housing sector. No sensible economic argument can be advanced for a cut-back in an area in which there is capacity not only in terms of requirements but also manpower. We have all heard the appalling news that 250,000 construction workers are now out of work. It makes no economic sense


that so much unused labour should be available in housing terms.
I hope that we shall soon see evidence from the Government that restraints will be eased and that local authorities will be encouraged to play their part. The Secretary of State should take action in areas where local authorities are not fulfilling their proper rôle in carrying out house building programmes. My right hon. Friend has said that he will do what he can to redistribute their share of the public housing sector market to other authorities who want to build. I hope that that was not just an empty gesture and that he intends to take action. I know that there are many local authorities who would like the opportunities to take up that uncommitted part of the building programme which other authorities have turned down.
I believe that the policy of selling council houses is short-sighted, populist and highly irresponsible. It may provide good Conservative electioneering slogans at local and general elections, but as a policy it makes no sense at all in economic or financial terms. It damages the housing prospects of those in most desperate need. It is ludicrous to try to pretend that one can reduce the level of local authority housing stock without affecting people's chances on housing waiting lists. Most people know that local authority housing usually becomes available as a result of voids produced by people moving of dying. Those houses are then vacated and occupied by another family.
I am afraid that the sale of local authority houses will reduce the total stock available. It will certainly reduce the number of voids that are available and will reduce the chances of people being housed. It is hypocritical of hon. Members to claim that they wish to help people towards home ownership and that this will not damage the interests of every-body else. They are severely damaging to the interests to those in housing.
We used to be told by Tory spokesmen—although we have not yet heard it today—that the idea of selling council houses was to make available finance for new houses, and that we would not have had the use of those houses that were sold anyway, because they were already occupied. However, the Tory Party has abandoned that idea. We have not heard

it today and it does not fit in with the general policy of reducing council house building anyway, so no doubt, that idea has now been thrown out of the window.
The housing stock has now been reduced and undermined by a cheap popular gesture to buy a few votes. The policy is based on a simplistic and fallacious economic argument. Its financial implications are obvious. In the first few years the local authority makes a gain and receives a slightly higher return in terms of repayments than it would have received as a result of rent income. Neither does the authority have to spend money on rent repairs, so it is slightly better off. However, it does not take long before the scales are tipped and the local authority becomes worse off, because it has lost its rent income, which was virtually inflation-proof, and receives only the same monthly amount.
The studies that have been carried out by Shelter and published in Roof have made clear that that is what has happened in Leeds. I have also come across evidence about a small local authority which was Tory-controlled between 1972 and 1974. It sold 451 houses. In 1974–75 the net effect on its housing revenue account was just under £17,000 surplus. In 1975–76 the surplus was only about £26,000, because more houses had been sold. However, as early as 1976–77 the surplus had turned into a deficit of almost £14,000, because of the lost additional rent income that would have accrued to the local authority from rent increases.
It is clear that every authority that has indulged in council house selling has discovered that there is a great financial loss to be made and we must consider upon whom that loss falls. Is it the taxpayer or the ratepayer? In most cases the answer is neither. The loss falls on the remaining tenants, who are generally unable to afford to buy their own houses. It falls on the poorest tenants and they tend to take the burden of increased rents as a result of the privileges that have been made available to wealthier tenants, who have been able to buy their own houses at 20 to 30 per cent, less than the market price.
This is a socially undesirable policy, because it redistributes income from the poorest to the wealthiest tenants—from those who cannot afford to buy to those


who can and also because of the pattern of sales that take place when local authorities embark on this procedure.
In every area in which sales have taken place it is the more attractive houses that have been sold—the newest, post-war houses on the smartest estates. Pre-war houses, those on rundown estates and high-rise flats have not been sold. As a result, local authorities have been left with a disproportionate share of older, more run-down houses, and flats in high-rise blocks, making it impossible to transfer tenants with children into better accommodation. It is such people who pay the price—those living in substandard accommodation or high-rise blocks who do not have the opportunity to move into decent housing conditions because the Tory Party has made some cheap publicity and gained political advantage out of giving away a publicly-owned asset.
One of the other arguments that we have heard today centres around the Rent Act and its workings. We have heard yet again the solution that is always trotted out by Tories for solving the problems in the private rented sector by reducing tenants' rights. We have been told again and again that the only way in which the private sector can work is by removing tenants' rights. There is no evidence—and I have never seen any produced—that there is any connection between the decline of the private rented sector and the housing legislation that has been passed over the years. The decline in the private rented sector has gone on virtually unabated since the war irrespective of whether there has been a free for all—as in the Rachmann period—or the controls of the 1974 Rent Act. The hon. Member for Blaby (Mr. Lawson) can shake his head, but if there is any evidence I hope that we shall hear it from him. The only evidence that I have heard put forward is that the London Evening News or Evening Standard contain fewer advertisements for flats to rent than there were before the 1974 Act. Of course there are fewer advertisements, because tenants cannot be thrown out, but that does not mean that there is less property available. We are talking here about the global stock of housing, and that has not been affected.
We have heard a lot about easing the Rent Act so that there can be freely-negotiated agreements between landlords and tenants. I have always thought that one can have such an agreement only if each side has more or less the same bargaining position. I do not believe that a young couple with a desperate housing need is in the same bargaining position as a landlord who can let his property to anyone he likes. That is not putting people on an equal footing, because they are not free to negotiate on those terms.
It is often maintained that a healthy private rented sector cannot coexist with rent control and security of tenure. If that is true, there is no place in a civilised and humane society for a private rented sector, because we cannot run the housing system on the basis of pushing people for every penny that they have without any protection from high rents or eviction from their homes at the behest of the landlord. I do not see any future in that. If that is the only way in which the private rented sector can operate, the sooner that we admit to ourselves that it does not have a rôle to play in providing decent housing for our people and, instead, concentrate on making proper provision in the public sector through co-operatives and home ownership—the better it will be. We are deluding ourselves if we believe that that sort of alternative is acceptable to our people as a decent housing policy.

Mr. Deputy Speaker (Sir Myer Galpern): Order. We ought to begin the winding-up speeches at 9.20 p.m. and there are still several hon. Members who have been sitting patiently throughout the debate and who are anxious to take part. I therefore appeal for brevity in order to enable the Chair to accommodate all the hon. Members who wish to speak in the debate.

7.48 p.m.

Mr. Michael Latham: I shall refer presently to the points that have been made by the hon. Member for Gravesend (Mr. Ovenden). However, I first wish to declare my interest as a paid director of a housing company and as an unpaid director of Shelter.
I listened to the Secretary of State's speech with a growing sense of gloom.
It strongly reminded me of what one of the worst of our Poet Laureates said of a dying monarch—I believe it was Edward VII:
Across the electric wires the electric message came:
'He is no better, he is much the same'".
It is obvious that the three-year housing policy review will produce little change. Once more we shall continue with the policies of controls, subsidies and distortions which have led to the spending of literally tens of thousands of millions of pounds of public money since Addison first introduced direct subsidies for council housing in 1919. There is now a higher level of public sector provision and a lower level of owner-occupation in this country than exists in many Eastern European countries, let alone the market economies of the West. The Secretary of State should look at the record of West Germany since the war where private enterprise has built 500,000 houses a year and hardly any homes are owned by the public sector.
Of course the truth of the matter is that the powers of Housing Ministers are very limited. First thoughts are sometimes best, and I thought it would be salutary for myself to check something that I said in my maiden speech on 12th March 1974 about the fact that
When mortgage finance is readily available, housing booms; when it is short, builders cut back on output to avoid having unsold houses on their hands. It is a fact of life. I have yet to be persuaded that any Government can do very much about it.—[Official Report, 12th March 1974; Vol. 870, c. 168.]
That remains true today and that is why, when the construction industry representatives meet the Secretary of State or the Prime Minister, as they did last Thursday, they come away disappointed.
There is one area in which Ministers can act—namely, land. The Secretary of State told my hon. Friend the Minister for Henley (Mr. Heseltine) to go away and think out Conservative land policy. He quoted some highly tendentious figures about building plot prices and refused to give way when I sought to test his arguments. Of course, plot prices rose under the Conservative Government—but so did the number of plots coming on to the market. It was three or four times as high as the present figure.
No one really knows what the price of land is now because relatively little is available and even less is being bought. I said in our debate on 21st April that most of the building land on the market with consent was being offered by other builders trying to offload their stocks, or by Receivers. White land—the reserve stock for building in the 1980s—is virtually unobtainable as vendors sit tight, frightened off by the threat of the development land tax and its complexities or by a local authority intervening with a suspension notice under the Community Land Act.
When I want to know what is happening in the land market, I prefer to listen to the builders than to the hon. Member for Mitcham and Morden (Mr. Douglas-Mann), who in an intervention during the speech of my hon. Friend the Member for Henley tried to suggest that there was no real problem. The House-builders Federation said recently:
The second most serious constraint on the future supply of housing suggested by housebuilders is the lack of building land at viable prices, with 85 per cent. of the respondents considering this likely to restrict output to at least some extent, and over 60 per cent. suggesting that it could operate as a major impediment. These shortages of land at viable prices have been experienced by builders throughout the country".
Of course the chickens are coming home to roost over the Community Land Act, which is providing the utter failure that everyone said it would be, except the present Minister of Agriculture, Fisheries and Food, who thought that it was the "total solution" to the land problem—as if bureaucratic control and State intervention with very limited resources could ever be an effective substance for market forces.
The Minister for Housing and Construction said in reply to the hon. Member for Brigg and Scunthorpe (Mr. Ellis) on 12th May that the land scheme had made a good start. Indeed, it was apparently so good that his Department got its sums wrong. He said that 1,571 acres of land had been acquired, which was
about one-third more than the acreage figure incorporated in Cmnd. 6393."—[Official Report. 12th May 1977; Vol. 931, c. 579.]
I was never much good at maths, but the table on page 75 of Cmnd. 6393—the 1976 expenditure White Paper—shows a prediction of 1,500 acres to be acquired


in 1976–77. How 1,571 acres represents "about one-third more" than 1,500 is not immediately clear, but perhaps all will be explained in due course. In any case, it is one thing for local authorities to buy land. I bet that there were plenty of builders and landowners who were happy to unload some of their abortive white land stocks last year, or even some land with consent that was no longer viable because the market had changed.
But what happens then? After all, under the "total solution" local authorities were expected not to keep the land but to resell it to other builders to get on with building. Indeed, land acquired for council house building and land for resale are in different tables of the 1977 public expenditure White Paper. Who is going to buy it? Who has bought it? And at what price?
After all, the reply of the Minister of Housing and Construction made deafeningly little reference to the total change in circumstances produced in GNLA/12, the departmental letter of last December which rewrote the land scheme by requiring all sales to recoup expenditure within two years in the case of housing. I said in our debate in April:
Therefore, the Community Land Act is of no use for acquiring land for housing in practice, except for green field sites. There is no hope of any sites in inner city areas fulfilling the criteria."—[Official Report, 21st April 1977; Vol. 930, c. 469.]
The Association of Municipal Authorities has now said the same.
An article in Estates Times refers to the AMA telling the Secretary of State that the Act is causing
frustration, disillusionment, and worst of all lost opportunities ".
The article goes on:
The AMA says it is impossible to guarantee a fast disposal of land under current circumstances. Local authorities, they say, must be in a position to offer the widest possible range of opportunities to would be developers.
So what is happening? They are all queueing for the let-out paragraph 14 of the circular dealing with
schemes which do not satisfy the criteria but which, nevertheless, have powerful planning and social arguments in favour of early local authority intervention".

We know two things about the let-out, both gleaned from parliamentary answers. First, no specific figure has been allocated for it this year, as the Under-Secretary of State for the Environment told me on 15th February, and, secondly, that early action on this matter is unlikely. I asked the Secretary of State for the Environment
what loan sanctions have so far been: (a) sought by and (b) granted to local authorities for acquisitions under the Community Land Act 1975 of a planning or social nature, as outlined in paragraph 14 of GNLA/12".
The Under-Secretary replied:
Loan sanction applications in the financial year 1976–77 were concentrated mainly in the first quarter. First proposals to be considered in the light of GNLA/12 are currently being received. It will be some time before the possibility of a breakdown on the lines requested can usefully be considered."—[Official Report, 15th June 1977; Vol. 933, c. 175.]
So the AMA will be disappointed. Why? It is because the Government have never decided what they want the Act to do. If it was to allow local authorities to make a quick buck, it could not work because the market will not stand it at present and such an approach directly conflicts with inner city policy and good planning, let alone the loss of good agricultural land. If it is to be a tool of inner city policy, it could achieve something in partnership with private enterprise, but for the fact that the resources are simply not there and that much of the land is owned by local authorities already, as is admitted in the White Paper on policy for the inner cities.
Land is at the heart of housing policy. This House has never got it right since the war. We have certainly not got it right now, and everyone knows it. The next Government, with which I am sure that my hon. Friend the Member for Henley will be strongly associated, will have to try yet again to equate the law on land with practical reality.

7.58 p.m.

Mr. Ronald Atkins: In listening to the hon. Member for Melton (Mr. Latham), I understood why my right hon. Friend the Secretary of State denounced so forcibly the economists and Opposition Members who wish to regard housing as a commercial commodity. It may seem surprising that I should be so pleased that this came from a Labour Secretary of State, but many


of us were rather worried by reports that his Department was being influenced by such arguments. It is because houses were regarded as commercial commodities until after Addison started giving assistance that we have a housing problem today.
In the great amount of house building of the eighteenth and nineteenth centuries housing responded to market forces, and that was why it was so inadequate. Even the strongest laissez-faire economist of the time agreed that the effects on health, especially through infectious diseases, were such that housing could not be regarded as a commercial commodity.

Mr. Michael Latham: Is the hon. Gentleman aware that in his book on housing conditions in 1850 Engels wrote that we already had sufficient housing stock in this country given proper usage?

Mr. Atkins: How wrong he was. Everyone realises that now. If the hon. Gentleman quotes books like that, I can understand why he holds such views. They are nineteenth century attitudes. Even in Addison's time, as the hon. Gentleman says, the major parties realised that decent housing could not be provided if the provision of housing were left to market forces. That is why every Government after the First World War and for some time after the Second World War—I hope that this has not changed—decided to help housing, Labour Governments doing so more generously in the inter-war period than Conservative Governments. Nevertheless, that was an attitude adopted by both parties in Parliament and at local authority level.
It is sad to find economists and others who want to change that philosophy. The point made by my right hon. Friend is of major importance. If he means it, it is the finest thing in his speech. Some of us were afraid that we might go back on that attitude. I hope that that philosophy will appear next week in the Government's White Paper. It will be sad if that attitude changes, because we must bear in mind that the housing problem is still serious. I know that housing provision is better, but good housing is still beyond the means of many families. It is true that incomes have increased, but so also have housing costs and the price of houses.
It is unfortunate that the cost of a house depends so much on interest charges. The cost depends much more on such charges than on timber and land. The cost of a house is primarily the result of high interest charges. We have seen great increases from the halcyon days of the first Labour Government after the war when interest charges were roughly 2½ per cent. When the Conseravtives took over in the 1950s, they forcibly increased interest charges and made housing more expensive.

Mrs. Elaine Kellett-Bowman: I suppose that Labour increased them accidentally.

Mr. Atkins: Events that have taken place since have increased interest charges—for example, the economic weakness of the country.

Mrs. Kellett-Bowman: And Labour.

Mr. Atkins: The cost and the bulk of the problem should not be borne by the council tenant. It is a national problem that requires a national solution. That is one of the reasons for my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) referring to the rapid increase of house prices since 1968. My hon. Friend compared mortgage charges with charges for items such as bricks and mortar, the former having increased much more quickly in price than the latter.
Another obvious reason is that supply is not meeting demand. It is clear to anyone who has an active constituency interest that housing problems are the most important issues that a Member of Parliament has to deal with on Saturday mornings. At least half the constituents who come to see me have a housing problem.
Housing problems lie behind so many of the other problems in families and in society. There is a need for many more houses to be built, especially for lent. The need is as great as ever. I share the disappointment of my hon. Friends that the number now being built is not sufficient. We should like the Government to do everything possible to increase the number being built.
We believe the Treasury expenditure cuts have done much to prevent as from realising our original hopes. I am hoping that the trend will be changed as soon as


possible. I agree with my right hon. Friend that a great deal of improvement must be made to existing stock. Much more will have to be done in many terraced streets in towns where houses are allowed to remain empty and deteriorate, lowering the whole tone of the street and consequently causing further houses to become and remain empty.
Grants alone are not sufficient. When I have investigated the reason for many terraced houses in the town remaining empty—there are at least one or two in every terraced block in Preston—I find that the house belong not to the corporation but to individuals, very often elderly persons who cannot afford the necessary capital improvements. Often those people cannot sell their house because no mortgages are available. That is what I should like to see the Government make available immediately. Very often terraced houses cost £6,000 or £7,000 or even less. They are good houses, and if they were improved and lived in the tone of the whole district would be improved and people would be encouraged to stay in the streets.
Another factor may have been the Rent Act, but it is more frequently the case that the owner is unable to maintain the house. The Government should require local authorities, with Government financial assistance, to take over and rehouse the many people who are on the local authority waiting lists.
The improvement of older council housing should proceed, but we should not always ride roughshod over the wishes of the tenants. I have seen so much modernisation in Preston, often with disastrous results. For example, some of the older council dwellings have had central heating installed. Very often tenants have said that they do not want it. They want the improvements but not central heating. It seems that they must have it whether they want it or not. The results have been bad in many cases.
It frequently happens that the air circulation is all wrong. Fungus develops for the first time on the kitchen and bathroom walls, as well as on other walls, expensive to heat their houses with central Tenants who are already finding it too heating are told to open the windows to improve the circulation so that the fungus will disappear. Naturally they become

incensed that that should be necessary. Eventually in some houses the tenant gives up the central heating and brings in an oil stove because he or she cannot afford to use the central heating system which has been installed at great cost. There are grounds for greater consultation of tenants. There is a need for a tenants' charter. There should be consultation before modernisation takes place.
I urge the Government to increase housing provision rather than to reduce it. Housing is surely the most fundamental part of the social services. All other social services would be less expensive if we had a good basis of housing. As a teacher, I found in nine cases out of ten that if I had a child who could not be properly educated he came from a bad home. Illness, which is an expense on the National Health Service, is frequently caused by bad housing. Delinquency, family problems, the break-up of families, conflict between parents and the consequent effects on the children are frequently the result of bad housing.
I have always regarded housing as the major priority. A strong house building programme, moreover, is the best way to lead the United Kingdom out of the industrial stagnation that we now face, as it was in the 1930s. Economists and economic historians have frequently stated that Britain emerged from the depression of 1931–33 largely because of the increase in house building. As hon. Members have said, with a quarter of a million construction workers unemployed and by using materials that are largely British, with the single exception of timber, an increase in house building would not be inflationary. It would enable us to conquer unemployment and at the same time to provide work without inflation. On both those grounds, I urge the Government to increase their expenditure on housing.

8.10 p.m.

Mr. R. A. McCrindle: I do not for a moment underestimate the need to continue to provide houses for rent, whether through council provision, housing associations or, indeed, private landlords, but I hope that the House will forgive me if in this short contribution I concentrate my remarks wholly on the subject of owner-occupation. I do so because the


development of owner-occupation since the end of the war has been little short of a social revolution.
The Secretary of State confirmed that 53 per cent. of houses in this country are now in owner-occupation. It is evident that many more people wish to own their own homes. I believe that housing policy should be substantially—obviously not wholly—aimed in that direction. Therefore, I was pleased to hear the Secretary of State seemingly confirm that the provision for tax relief on mortgage interest is unlikely to be changed. I hope that is so, because it has been a major contribution towards the development of owner-occupation since the end of the war.
The question may be asked: if 53 per cent. already own their own homes, why should greater assistance be given to those who do not yet own their own homes? The answer is to be found in the fact that to encourage people into owner-occupation is substantially more economical than to continue to prop up council tenants by subsidies. That point was fairly dealt with by my hon. Friend the Member for Henley (Mr. Heseltine) in opening the debate.
Owner-occupation is very much desired by those who have the slightest chance of being able to afford to buy houses, but I do not overlook the fact that there will always be a number of people who will not be able to afford to buy houses. Those who pretend that we can ever reach 100 per cent. owner-occupation are, frankly, chasing a will-o'-the-wisp. However, we can substantially increase owner-occupation beyond 53 per cent.
I want to concentrate my remarks on helping the first-time buyer with both interest rates and the deposit. I shall take further the points made by my hon. Friend the Member for Henley, and I hope to be a little more specific in the process.
The best help that any Government can give to a prospective owner-occupier with regard to interest rates is a stable economy, but beyond that there is the argument that building societies could perhaps more quickly respond to changing interest rates. Building societies have rightly been criticised in the past for the cumbersome process that they employ, which seems to allow a long time to elapse

before a fall in interest rates is reflected by a fall in building society lending rates. The impression given—no doubt unfairly—is that interest rates are nearly all ups and not many downs.
The Secretary of State reminded us that in the last two or three months there have been two decreases in interest rates. I hope that that will give us the opportunity to move towards greater stability in lending rates. Recently, I caused something of a stir by suggesting that instead of reducing the lending rate by the full amount possible we should reduce it by slightly less, in return for an undertaking that it would not again be increased unless and until the minimum lending rate had gone up by a full 2 per cent. or 3 per cent. The Minister for Housing and Construction did not respond as warmly as I had hoped, and the building societies did not respond at all, but I shall continue to press the matter, because I believe that stability in interest rates is one of the best ways in which to encourage young first-time buyers.
I want to concentrate on three schemes to assist young people who want to buy homes but who have difficulty in raising deposits, and to urge the Minister, when he replies, to comment on the practicality of any one of them.
The first is that, up to a certain limit of income and house price, for every £2 saved through a building society a grant of £1 should be made by a Government Department. I believe that if young people are prepared to extert themselves to the point of raising two-thirds of the required deposit it is a good investment for the country to assist them with the remaining third.
Secondly, I draw attention to the prospect of what is called share purchase. Such a scheme would allow a buyer to acquire less than 100 per cent. of the house at the outset, the financial institutions taking the balance and selling progressively, if that is a fair way to describe it, to the buyer, the interest rate on the difference being met in the early stages by the Exchequer.
The third, infinitely simpler scheme, would involve the Government undertaking a maximum mortgage interest rate by the simple device of altering the rate of tax paid by the building society so as to


achieve a continuing stable rate of lending.
I believe that all, any one, or even a combination of two of these schemes might be justified. The whole idea of owner-occupation is still immensely attractive to many people who find house purchase beyond their reach. Owner-occupation gives a family independence and—this point is frequently stressed by the Opposition—buttresses individual freedom.
It is important to encourage owner-occupation. My observation of those who have been successful in buying their own homes shows them to be happier as owners than their contemporaries appear to be as tenants.
Owner-occupation is an excellent bargain for the taxpayer, because the average subsidy on a council house—certainly in the first year—is substantially greater than the average tax relief given to a mortgagee—equally in the first year.
Financial realism indicates that the Government should be thinking hard how they are to implement the undertaking that they gave to first-time buyers in their two election manifestos in 1974. I was disappointed to hear the Secretary of State gloss over any attempt to predict the date on which the Government would start to implement that important aspect of their housing policy, I repeat, with regard to first-time buyers. This is an enormously important area. I believe that there is a feeling of betrayal among many young people who had hoped that by this time they would be on the path towards owner-occupation but who find that they are not.
I wish to be fair. I concede that there have been and, indeed, still are economic difficulties in introducing such a policy, but the House will be disappointed if, when the Minister replies, he does not indicate his current policy for the encouragement of owner-occupation, particularly among first-time house buyers. I hope that he will state whether he agrees with any of the three schemes that I have mentioned, or, if not, what encouragement he intends to give to the many people who are waiting for encouragement.

8.19 p.m.

Mr. Frank Hooley: I entirely agree with my hon. Friend the

Member for Preston, North (Mr. Atkins) that housing should have the highest social priority. Good housing underpins health and education; bad housing undermines both. I have never had any doubt in my mind that if forced to choose between social priorities I should put housing at the top of the list.
I also agree with my hon. Friend that the cases that come to me as a Member of Parliament are more often concerned with housing, despite the real achievements that have been made over the past 10 years, than any other single problem.
The hon. Member for Henley (Mr. Heseltine) put forward some interesting arguments. He was cagey about council house rents. He did not commit his party to do anything radical about them. He launched a slightly veiled attack on the Community Land Act and the Development Land Act. But even he was not prepared to praise the disastrous free-for-all of 1972–73, when we had initially a free market in land.
Another part of the hon. Member's policy was to sell off public assets. He wanted to sell off council houses and the assets of new towns—these great social assets that have been built up by successive Governments, at the expense of the public, over 20 or 30 years. The hon. Member also wanted a free market for rents in the private sector. If that is the Conservative Party's policy, I hope that the day comes when the electorate firmly rejects it.
The Secretary of State dropped a heavy hint that the forthcoming Green Paper or White Paper on housing finance will be fairly conservative in its presentation of the problem and in its solutions. I agree with him that it is fundamental to housing policy to have public support in both the private sector and the public sector. It is a social need of overriding and overwhelming importance. It is essential that the Government should be committed to provide public finance to meet that need.
Neverthless, there are one or two points that need to be explored. We should not take for granted that the existing system is all that there is. The basic problem is to bring down high interest rates. They are the curse of housing in both sectors. We must get away from the lunatic rates


that have prevailed over the past few years.
Why is it impossible to devise a two-tier interest rate system so that housing can benefit from a lower rate? We already have a two-tier system for export credit to benefit the economy of this country. Why cannot we devise a two-tier system for housing? Within such a system there could be variable interest rates to help first-time buyers. Surely it is not necessary to pay the same level of interest over the entire 20 or 25 years of a mortgage. Surely it is not beyond the wit of building societies, with the help of Government, to devise a system that would enable young people in the 22–30 years of age bracket, when they have children and the wife's earning capacity is limited, to enjoy a lower mortgage rate than at a later stage when they are in a better position to pay.
One of the problems that have not been much discussed in the debate is that of repair and maintenance. No one has devoted much time to the question of more sensibly maintaining our present housing stock. It is a problem that needs to be examined further. In the private sector there is a potential army of labour. About 3 million owner-occupiers are capable and willing to do a lot of work on their own properties, to keep them in good order and repair. They reduce the market labour charge in terms of maintaining and decorating that property.
Within the public sector, we should examine whether there is any possibility of providing an incentive for people to carry out certain repair, maintenance and decoration work on their properties. Most tenants make a great effort to keep their homes in good order, both decoratively and in terms of repair. I wonder whether, in view of the immense cost of repair and maintainance and the problems of labour recruitment—although that does not apply at present—tenants should be given financial or other help if they are prepared and able to carry out certain tasks on their own properties. We should examine that possibility.
I see no reason why local authorities should not be encouraged to build houses for sale if there is a reasonable balance in their area between demand for houses for sale and demand for houses for rent. A modest experiment carried out in Sheffield has been amazingly successful. The

houses that the local authority built for sales were snapped up immediately by people on the housing waiting list who were glad of the opportunity to buy those homes. That experiment needs further examination.
Obviously, the speculative builder is more vulnerable to fluctuations in the economy than are public corporations, such as local authorities. If local authorities were given wider powers to build for sale it could influence house prices and the availability of housing stock for owner-occupation.
Demographic factors have not been mentioned much in the debate, nor has the startling reduction in the birth rate and the steady rise in the number of retired people that has been experienced over a long period. The birth rate is the more difficult problem, because it has fluctuated sharply and unexpectedly in recent years. It is bound to have an impact on the demand and type of housing required. It deserves fairly close study, so that we may work out future policy on the type of housing required and on housing finance.
In future, elderly people may wish to switch from owner-occupation to renting accommodation. At the moment, this is not easy to do. It is another problem to which more thought should be given.
The control of land is fundamental to the problems of the inner cities. I hope that the Community Land Act can be used where necessary to acquire and control land that will be needed if we are to have a sensible development of derelict areas. I hope that we shall not become obsessed with the idea that we had in the past, that inner city development must involve high-rise flats. Appalling damage has been done by high-rise developments in places such as Birmingham. There is no reason why we should not get away from this obsession for high-rise flats, which has occurred over the past two decades. When we set about rejuvenating inner city areas there is no reason why we should not use low-rise development.

Mr. Arthur Jones: I am interested in the inner city problem. About 75 per cent. of the land in the inner cities is owned either by local authorities or by public institutions. The hon. Member is saying that the Community Land Act


should be used to make further acquisitions.

Mr. Freeson: That is cock-eyed.

Mr. Arthur Jones: It is not cock-eyed. I have gone into this question thoroughly. I am sure that the figure is correct. I know that the Minister's sources are more elaborate than mine. But should not local authorities, which, after all, own vast areas of land in some of the cities, consider disposing of it to private developers?

Mr. Hooley: I am afraid that I cannot argue with the hon. Gentleman on the figures, because I do not know them. Perhaps the Minister will be able to clarify that point. All that I am saying is that the Community Land Act could be a key factor in collecting key portions, if not whole areas, of land where inner city redevelopment is necessary. Certainly the powers under the Act could be of great importance in rejuvenating the inner cities.
I am a little hesitant about the new apparent policy of discouraging the expansion of new towns, at least on the scale originally envisaged. There are still areas, such as the South-East, South Lancashire and West Midlands, which are grotesquely overcrowded, even today. I should not like the idea to get abroad that the new towns do not have a great future rôle. They have played a great rôle in the past and they still have an important service to perform.
I can understand why people feel that it is an insult to them that, in a time of great housing need, houses should stand empty for months and even years. All sorts of complicated legal problems are involved, which the Government are trying to sort out by legislation, but I wonder why it is not possible to grant a local authority the power to make an "administration order". Then, when a property has stood empty for more than six or nine months, say, the local authority should be able to take it over and let it to an approved tenant or family in need of housing but without expropriating it or taking over the owner-Ship. It would administer the property, charge whatever rent was necessary, and pay an appropriate rent to the person with legal title. That would at least

ensure that such properties did not stand empty ad infinitum.
Our basic need is to build and improve more homes. It is fantastic that with 250,000 building workers unemployed we should be cutting back on house building and house improvement. The need is still for more and better houses and for greater improvement of our housing stock.

Several Hon. Members rose——

Mr. Deputy Speaker: I think that I should make a further appeal for brevity. If hon. Members will restrict the length of their speeches to about eight minutes every hon. Member who wishes to speak can be accommodated.

8.32 p.m.

Sir Brandon Rhys Williams: I shall try to do as you request, Mr. Deputy Speaker.
It is useful for us to ask ourselves two questions in this debate: are we making the best use of the housing subsidies, and are we making the best use of our stock of housing? On the latter question, I do not want to emphasise again the fact that there is a large amount of altogether empty property, because that is a problem which has often been brought out, but we must also admit that much council property is under-occupied.
Although there is no security of tenure for council tenants, it is clear, as we all know from our surgeries, that in council housing and housing association property people do not like being shunted about by officials and that there is a good deal of resistance when people are moved into other properties, even when discretion exists and a reasonable choice is available. They feel that they are second-rate citizens when they are directed into new accommodation, even when they are obviously not making full use of their existing property.
I should therefore like to find ways of encouraging people to plan their own moves by offering them better opportunities to become freeholders, whether in former public sector properties, in private rented accommodation, in new housing or, particularly, in newly-converted property. That last category is an aspect of the housing market which lately has unfortunately been neglected.
In the private sector we must use the vacant spaces better. I have given this subject a good deal of attention and have tried to make specific recommendations. We have to provide for mobility by an increase in the total supply of suitable accommodation. We have a surplus of houses and an even greater surplus of lettable or potentially saleable rooms. Many houses were designed for the larger families of the old days and have been converted in an inadequate or unsuitable way.
The hon. Member for Sheffield, Heeley (Mr. Hooley) drew attention to the dramatic fall in the birth rate. This has not come into our thinking sufficiently but the effect of it will be seen quite soon in housing.
We need to review the operation of the systems of improvement grants, because it is possible that the same amount of money could achieve more. If there is any candidate for an increase in expenditure in the housing area, it is improvement grants. The money saved in some directions could be applied more fruitfully for everyone's benefit if we reviewed the way in which the grants operate. The Government touched on this in the consultative document on the review of the Rent Acts.
We need a change in direction on housing subsidies and a change in the law on letting owner-occupied accommodation for a short term. My hon. Friend the Member for Henley (Mr. Heseltine) said a few words about the shorthold letting concept. I would like to say more than I have done in the past because obviously I have not succeeded in convincing the Minister. I want to approach this subject in a non-partisan and rational way.
We need some facts on the type of property offered for reletting under the Rent Acts once it becomes vacant. The Department has evidence of the large volume of property which landlords are offering for reletting and thinks that the introduction of shorthold would reduce the supply. I do not agree, because I think that the sort of property offered for reletting at present is either the worst of all and should be taken off the market before it is offered again or, on the other hand, may be the very best, in the stratospheric reaches of rents, and that is not

what we want to be legislating for just now.
It is wrong to impede parties from coming to a mutually beneficial agreement simply because of the ideology of security of tenure. There are categories of people and types of premises where short leases under a reasonable legal formula are wanted and open-ended tenancies are inappropriate. For these people the insecurity of renting in the owner-occupied sector is unsatisfactory. Very many people in Kensington—and I am sure it is the same elsewhere—have to resort to taking rooms in the owner-occupied sector because such tenancies are all that are on offer. While that type of accommodation is not ideal for them—they want more security—they do not necessarily desire the total security of a freehold or a controlled tenancy.
An example of this is a young married couple who have not planned the eventual size of their family, where they want to live or the eventual jobs they may have. They are not yet in the market for a freehold, yet they have no claim for priority in the public sector. We need to cater for them. One could point to other areas where shorthold would be appropriate.
It is a pity that the Minister has consistently blocked the Bill that I have introduced and prevented it from getting to Committee stage. I believe that one could find a number of different practical aspects which might not make a big impact on the housing scene in themselves but which would make a start. The Department agrees that some kind of shorthold would be convenient for flats over shops. This is not a large area but it could make a useful contribution if there were suitable legislation for it. Shorthold would also be appropriate where the owner-occupier only has a life interest in the property and is under pressure not to let because of legal entanglements which might delay or prevent the eventual sale of the house when the owner of the life interest has died.
There are also very many cases that I can think of where the tenant actually only wants limited security, longer than when renting under owner-occupation, but not permanent. Instances include people who may be in London undertaking professional studies for a year or two or perhaps longer but who have no intention of


staying permanently in London, business visitors with short appointments, and people awaiting retirement.
This is another of the points raised by the hon. Member for Heeley. People who have brought up their families and whose youngest children have married do not necessarily want to go on living in the same house. Perhaps they have a need to realise their asset and put it into something which will produce income rather than simply to have empty accommodation which they feel obliged to offer to their in-laws or their children. After the marriage of the children, it should be possible for people to dispose of their house and to move into decent property where they have a reasonable degree of security and can invest their money, instead of having it standing idle in a house which is far too large.
In Kensington we also have a special housing problem. As Sir Malby Crofton had a very effective letter in The Times about this on 16th June, I want to follow it with a few words tonight. Other inner London constituencies suffer the same problem but not, I think, so badly as Kensington. We have a large presence of people whose general level of earnings tends to be much higher than their British equivalent. They tend to have the benefit of much lower tax rates. Lately they have been able to exploit an exchange advantage that makes central London property seem quite cheap to them. Many of them have Government or business backing and do not mind what they pay.
Therefore the character of inner London is rapidly changing because a large number of the better properties—and not only the very best properties, but average properties too—are going out of the control of Londoners and being taken over increasingly by people who have no continuing interest in the life of the capital. I agree with Sir Malby Crofton that this needs special attention. His letter has attracted a good deal of attention and I hope that hon. Members will also give serious thought to this problem.
I should be trespassing upon your good will, Mr. Deputy Speaker, if I ventured on to the subject of housing subsidies. I would like, however, to close by drawing attention to what I said when

the House gave me leave to introduce a Bill to reform the national insurance system. We really have to look at the way in which our housing subsidies are distributed and, I believe, to introduce a housing allowance, like a tax credit, which is related to the actual rent paid and which is also related to family size and need.
We have the embryo of this in the housing allowances brought in by the Housing Finance Act, but all too few people in fact claim their allowances and I believe that the Government ought urgently to be studying the situation which will inevitably arise as the operation of the fair rents system pushes rents up. Otherwise we shall force thousands, if not hundreds of thousands of tenants on to supplementary benefit.
I do not think that the housing situation must be one of total gloom, but it is a subject on which the public will not forgive lightly a party which systematically rejects all new ideas.

8.44 p.m.

Mr. D. E. Thomas: This debate is taking place amid the continuing grip of the reduction in public expenditure on housing, although naturally we heard very little about that from the Secretary of State in opening.
If my calculations are correct, the cumulative reduction in housing expenditure through both the public expenditure White Papers and the subsequent announcements of rounds of cuts in July and December 1976 amounts to a total loss for the housing programme between 1975 and 1979 of £1,250 million. No doubt, the real loss under the Government's cash limits policy will be even greater than this. It is in that context that we had the announcement earlier in the debate by the Under-Secretary of State for Wales that £11·2 million of the cuts in the Welsh Office housing programme had been restored. He can hardly expect me to shout with glee at that.
Neither can I shout with any joy at seeing that provisional results of the house condition survey indicate that the level of unfit housing in Wales is now down to 100,000. If my quick calculation, comparing the hon. Gentleman's figures with those of the Secretary of State earlier,


is right, the number of unfit houses in Wales is still well above the average number of unfit houses throughout Great Britain.
The Under-Secretary told us earlier that he is to have a working party between his Department and the Council for the Principality on the non-take-up of housing allocations. He should also look within that working party at the real housing need of the different districts in Wales to ascertain what their allocation ought to be in the context of a housing policy directed to tackling the basic problems of the older housing in Wales, the high proportion of unfit housing and the higher demand for owner-occupancy.

Mr. Wyn Roberts: Does it not strike the hon. Gentleman as curious that the Government should know about this underspending only at this stage? Does he not think that they could have monitored the progress of spending in the course of the year and discovered it a little earlier?

Mr. Thomas: I am grateful for that intervention. I certainly think that the price of a telephone call from the Welsh Office housing division to all the districts in Wales could have brought the information earlier, and there could have been far more effective monitoring of the position.

Mr. Alec Jones: I assure the hon. Gentleman that the figures on which we based our calculation were the actual returns submitted to us by each local authority in Wales. We are now discovering that these returns were not correct. I do not think that it is fair to attribute the blame to the Welsh Office.

Mr. Thomas: I think that it is a serious attack on the credibility of the treasurers and housing officers of our district councils in Wales to suggest that figures gathered by the Welsh Office are incorrect. I should be the first to deplore it if that were the case. On the other hand, I equally deplore a housing policy operated on a stop-go basis, as it has been over the past three years, so that housing officers and chief executives of districts who wish to plan on a five-year basis the kind of housing programme they want are unable to do so because one circular or one suggestion after another comes out.
I remember the visit paid to all districts in Wales by the Minister's predecessor at the Welsh Office, the hon. Member for Merthyr Tydfil (Mr. Rowlands), when he went on a tour telling district councils in Wales to rob the bank. Those were his very words, said in my presence.

Mr. Alec Jones: "Bust the bank".

Mr. Thomas: Yes, "Bust the bank". Yet subsequently, within nine months, we were having cash limits and expenditure cuts imposed. In that context no local authority can be expected to carry out an effective housing programme.
I stress that as local authorities now look to their housing needs for the next three years they should be thinking of putting in to the Welsh Office not realistic bids related to what they submitted in the last two years but bids for what they really need to tackle their housing problems.
I appeal to local authorities in Wales to undertake a programme not only of new house building for specialised needs but also of improvement. This will take them well beyond their 15 per cent. ceiling for Section 105 allocations which the Welsh Office has laid down. I was glad to hear that the Minister was being flexible on the 15 per cent. The truth is that the balance of a massive rehabilitation programme would take certain district councils well beyond their 15 per cent. The Welsh Office should look again at that ceiling, and, instead of imposing an initial ceiling and then becoming flexible in relation to various districts, it should consider giving more freedom to authorities to choose as between rehabilitation and new building. I say that because the balance of rehabilitation as compared with new building has an immediate impact on the total number of unfit houses.
I stress that we are working within a context of massive reductions in public expenditure on housing, and in a context also where not sufficient attention is paid to the relationship between the various types of housing expenditure. This has been touched on already in the debate, and I shall not go on at length about it because we have been warned about shortage of time. However, I emphasise that we ought to look again at the relationship between spending through the mortgage interest tax relief and spending on subsidy to the council house tenant.
I was very disappointed to have advance warning from the Secretary of State that the housing finance review, or whatever the Green Paper coming out next week is to be called, will not result in a fundamental reassessment of the cost-effectivness of our subsidies. It must be said again that any studies of tax relief to owner-occupiers show that public money is being ploughed in which tends to find its way especially to the upper end of the market, while, on the other hand, there are inadequate total resources going to housing. We should look again at the ways in which our total deployment of housing resources can be improved. If that means taking away tax relief at the upper end of the market even further, it must be done in order that our housing resources may be redistributed effectively.
In this debate, as in every housing debate, the Government have pretended that they give housing a high priority. That is totally at odds with their expenditure policies. I was glad to have from the Under-Secretary of State for Wales the small admission that he himself felt that the figures for housing in Wales given in the expenditure White Papers were inadequate. I was glad to have that admission, but the hon. Gentleman should admit also that his Government's expenditure policies mean that we shall never be able to tackle our housing crisis in Wales as we ought to tackle it.
The three recent rounds of public expenditure cuts have hit housing more heavily than they have hit any other single social wage item. The housing programme is still being severely reduced at a time of unprecedented unemployment in the construction industry. The consequence is that we face a deepening housing crisis, especially in the older regions of England, such as the North-East, and in Wales, where we have a preponderance of housing built at the time of the Industrial Revolution and where, accordingly, a more urgent initiative from the Government is necessary to tackle the problems.
Finally, I turn to the impact of housing cuts and the impact of the Government's housing policy on one area in Wales, namely, our capital city of Cardiff. I am becoming increasingly concerned about what is happening in Cardiff—both about

the attitude of the South Glamorgan County Council and the attitude of the Cardiff City Council. This year already homeless families have been thrown out on to the street, families have been split up and families have been thrown out of hotel and short-stay accommodation by the South Glamorgan social services department. Moreover, we have seen an unwillingness on the part of Cardiff City Council to accept the responsibility for homeless persons, and the Welsh Office has not felt able to intervene in the matter because it sees it as an internal dispute within Cardiff between the social services and housing.
The root of the problem in Cardiff is not merely that we have extremely reactionary Conservative councillors running Cardiff. We have, in addition, the failure over the past 10 years to tackle the 3,000-strong waiting list in the city. Cardiff's council house building programme has plummeted down from 1,000 in 1970 to fewer than 500 houses in 1976–77. Demolition in Cardiff has been ahead of new building every year since 1973–74.
I appeal to the Welsh Office to examine the situation in Cardiff as it reaches crisis point, particularly as regards homeless families. I also ask the Welsh Office to be prepared to intervene between the district council and the city council if there are any further evictions and if any more families are split up by the authorities in Cardiff later this year.

8.55 p.m.

Mr. Eric S. Heffer: I should like to raise one important aspect of housing that probably affects other cities as it affects mine. I refer to the uncertainty felt by people living in privately rented houses when those houses come up for possible slum clearance. All the time in my constituency an area or a number of streets is being designated as property which must be removed, and then a period of uncertainty begins. The local authority draws up plans, but then there may be a change in the authority's political complexion or in legislation or in the economic situation. The people concerned then do not know where they are.
Because the plans are deferred, property is not properly looked after. The


repairs are not done. The people do not know whether to do their decorations. At the same time, the houses are deteriorating. I have people living in rows upon rows of such property. I am sick and tired of getting in touch over the years with Ministers and local councillors of all parties. The people in the houses are fed up with what is happening.
It is very important that we should have a housing policy. We must have more housing, and much more money must be put info providing it. Once people are told that an area is a slum clearance area and that it will be cleared by such and such a date, they must know that it will be done then and that they will be rehoused.
We have a genius for destroying communities in big cities. During the Jubilee celebrations there were many street parties in my constituency. People came out into the small streets and had a whale of a time. Most of them vote Labour, so it is not a question whether they are Labour or Conservative. The point is that the community spirit exists.
When people's houses are designated for slum clearance, they ask "Is it possible for us to be rehoused in or near the same area together with our friends?" The authority replies "We shall do our best", but then the people are sent 10 miles away and are separated. They go into the outskirts, into areas some of which they do not know. Sometimes they are prisoners in high-rise blocks. We must be concerned about maintaining the communities.
In my constituency there is a piece of land called the Walton Triangle, which was railway property. We have been on about its use for years. The Liberals, Labour and the Tories have been in office in Liverpool, all of them saying that they would build houses there, but the plan has been put back. Finally, it has been decided that houses will be built there, some for private renting, some for owner-occupation and some for council renting. That is fine. But, again, will the people in the locality, from the slum houses or old houses that are to be pulled down, have the opportunity that they want to move into the new property? I hope so. I am asking the local authority to give them the opportunity, but can it be guaranteed? I am afraid that perhaps it cannot.
We should aim at getting local authorities to ensure that people are moved as a community. When I was on the local authority and served on the housing committee I always wanted to see that when we got rid of one set of houses we built close by and moved the people affected into the new houses. Of course, it was necessary to move the people whose houses were the first to be demolished out of the area and then to move them back again, and one always lost a certain number. But it could be done, and it should be done. That is what we should aim at in any serious housing policy.
I do not agree with those who argue that we should continue to build new towns on a vast scale. I think that such a policy would be quite wrong. In Liverpool, we have acre upon acre of land lying derelict, but new towns outside with no employment. Once we build a new town we have to put industry there, but in an area like Liverpool various industries are declining in the city centre. I do not think that that is a very bright situation. We have to bring people back into the city centres. I do not mean by that that we should destroy the new towns that are already in existence, but we should not develop any more, at least not on a vast scale. We must rebuild and repopulate our city centres and get new industries on a small basis into them for the people living there.
My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) made a very important point about owner-occupiers who want smaller accommodation once their families have grown up and gone. It is not always easy for them to buy a smaller property, and it would be of some assistance to enable them to go into council property and to help those younger people who find it difficult to raise a deposit to purchase the kind of good artisan dwellings thus vacated. It is important that this should be done.
Above all, we must get the quarter of a million building workers back to work, both in building new homes and in rehabilitating old ones. It is a scandal that in my area for example, where there are thousands of people on the housing list, thousands of building operatives, many of them highly skilled craftsmen, are walking the streets seeking work. It is the economics of madness, and it is


about time that we changed policy and did something to get the building workers back to work to build the houses that are so desperately needed.

9.3 p.m.

Mrs. Elaine Kellett-Bowman: It is not often that I follow the hon. Member for Liverpool, Walton (Mr. Heffer) and agree with everything he has said. How right he was to say that large cities like Manchester, Liverpool and London have been far too good at destroying communities. How much better it would have been if they had sought to save these twilight areas rather than destroy them and build often soulless buildings at rents which people cannot afford, destroying their community spirit in the process.
My local council has not had that bulldozer mentality. Until recently it has had a very good and well-balanced housing programme. It has built steadily to meet the demand, especially for old people's dwellings, which are so vital to us in the North-West with our ageing population. It has had a planned programme of improving older council houses, of which we have many. It has lent extensively to people to buy their own homes. It has encouraged home improvements, which are particularly vital in an area such as ours, which has very many pre-1914 houses. It has cooperated closely with housing associations, and also with private builders to ensure that land has always been available when required and that there should be continuity of building.
On all these counts, I regret to say, the council's policy has been shot to pieces by the present Government's policy. Our council building programme was dealt a savage blow last July when the Government, as part of their economy measures, asked local authorities not to start building work on new schemes even if the contracts had been accepted. This was described by our deputy chief executive as
the most serious piece of control ever exercised over housing".
But, despite severe Government restrictions and bias against us in the rate support grant to that sort of area, my local council has done all in its power to get on with the job of meeting the

housing needs of those on the list, especially the need for old people's dwellings. I have no doubt that it will continue to struggle against the odds, but, unfortunately, they seem to be getting longer every week.
The council's efforts to help people to buy their own homes have been brought to nought by a reduction in the amount of money available for council mortgages from £600,000 in 1976–77 to a mere one-sixth of that amount for 1977–78—only £95,000. We learned of that slashing cut with absolute horror in March because it has set all our plans at naught. This is a disaster in an area such as ours because we have a very high proportion of pre-1914 housing on which building societies are very unwilling to lend. Moreover—and this compounds the problem—we have a large number of relatively low-wage earners who find it difficult to get building society mortgages. In the past three years, 550 such people have been helped. Goodness knows how many we shall be able to help in the next year. The houses that they buy are the very houses which need modernisation and improvement.
We were told that in order to keep control on expenditure the Government had decided to include all mortgage loans in the general allocation for direct lending, lumping it all together with conversion, repairs and improvements—a total for our city of only £249,000 for all these categories of work.
The council also worked closely with the housing associations to help to meet local housing need. I mention three bodies: the British Legion, the North British Housing Association and the Northern Counties Housing Association. To our utter dismay, when a site had been not only bought but landscaped and serviced by the housing associations for a very well-balanced housing development, the Government suddenly, last September, stopped the development stone dead and redirected the money to so-called stress areas. We fought the decision as hard as we could, but we got no change.
The Minister has proudly announced today that part of the £57 million cut has been restored. I wrote to the Minister within five minutes of learning of part restoration of funds, only to be


told that the money was not for the likes of us but was for so-called stress areas. If he wants to know about housing stress, he needs only to come to one of my interviews any week and he will get firsthand examples of housing stress, not just housing statistics. Similarly, a housing association-planned development for 24 flats for single people was also abandoned because of Government restriction. This is a sector which gets scant attention—single women and single men who have little provision made for them. This development, too, was knocked on the head.
Lastly, a joint council-private builder project to build 64 houses for sale has had to be scrapped because no money is available locally for house buying, and "house for sale" notices are springing up all over the place.
It is small wonder that the employment situation in our intermediate area has been consistently worse than that of most full development areas and, indeed, of some special development areas. Until the Cabinet gives us a status on a par with that of our neighbours, we shall not be able to remedy the unemployment problem and get house buying going again.
The irony of it is that well over half of our total unemployed are builders. There would be many more were it not for the fact that local builders, in an effort to keep their workers together for when an upturn eventually comes, are taking on jobs at cost price or at below cost, and, indeed, in some cases 10 per cent. below cost. How much better it would be if all our unemployed builders could be employed on building houses instead of eating their hearts out on the dole. In our part of the country, people are loth to be unemployed. They are desperately independent, and it goes very much against the grain to be out of work for any time.
If the Government do not do something very soon to save our house building industry, particularly in the North-West, there will be no builders left when we once more take over and implement an active housing policy tailor-made to meet the needs of the people.

9.9 p.m.

Mr. W. R. Rees-Davies: propose to cover ground that has not

so far been covered, but before doing so I should like to comment not only on the able speech of my hon. Friend the Member for Henley (Mr. Heseltine) but on that of my hon. Friend the Member for Melton (Mr. Latham) and, strangely enough, the valuable contribution of the hon. Member for Liverpool, Walton (Mr. Heffer). It was like a breath of fresh air to hear the hon. Gentleman bringing forward the idea of keeping the community together, referring to examples in the recent Jubilee celebrations. It is a pleasure to pay the hon. Gentleman a tribute.
My hon. Friend the Member for Henley and my hon. Friend the Member for Kensington (Sir B. Rhys Williams) put the shorthold argument. I support it entirely, for the reasons they have given, but it docs not go far enough. The Minister has absolute power to decontrol from the Rent Acts altogether by region. There are many parts of the country, mainly in the shires—parts of Kent, for example—where the Rent Acts are no longer required.
The basic trouble is that since 1919 the Rent Acts have distorted the housing economy, and we must gradually rid ourselves of this distortion without creating hardships to those who have security of tenure at the present time. Hitherto we have not been able to set about this task, because of the danger of a Socialist Government. It has always been the hard rock philosophy of Socialism that in no circumstances must people be denied absolute rent control and absolute security of tenure. Those hon. Members who had to suffer a 24-hour sitting on the Rent Act in the Standing Committee had the opportunity of seing how very deeply Labour Members believe in that principle.
Now we are to have a report on vacant and under-occupied housing. It will probably be valueless, because it fails to understand the principles of housing. The Government, because they do not understand the principles of housing, have by their actions led to the abuse of housing. We need to introduce a system of new shorthold tenures, both for new housing and for premises that have been converted. At the same time we must in large tracts of the country get rid of rent control and security of tenure.
In order to achieve this without hardship we shall have to give in return what is, in effect, a shorthold for those who


have been in occupation for any length of time. If they have been in occupation for five, 10 or 15 years, or even longer, it will be necessary to give them a firm shorthold tenure, with the opportunity then to go on the housing list if they so wish, so that they will have the guarantee of security of tenure in council housing. This opportunity will probably be taken up in a certain number of cases. Where the person concerned may have been in a wholly inadequate position over many years it may be that a modicum of increase in rent and the opportunity for the tenant to carry out repairs will lead to agreement. But without ultimately unwinding security of tenure we cannot hope to have a real market operating.
Nothing is being done by the Government to help the young people who come into our cities or to help the single person who has to try to find accommodation. These categories have not been mentioned in the debate so far. Hostels are desperately needed in London and in all the major cities. Nothing has been done to provide hostels to enable young people to live at cheap rents in a reasonable way. This sort of accommodation, again, does not require security of tenure; that is purposeless. The young people want to stay only from six to 12 months at most, because they are moving about from one job to another.
I have raised these questions with the tourist bodies and with other bodies in London. There have been sympathetic soundings, but the Government have done nothing to assist in this direction. The Greater London Council is simply not interested, because the people involved are not the voters of the present time. I hope that the Government will consider the question of hostels and ensure that accommodation is provided in Liverpool, Birmingham, Manchester, Cardiff and London to enable young people to have somewhere reasonable to live.
Single people do not want security of tenure; they want the proper rebuilding and proper development of large existing blocks of flats. There should be an opportunity for the old people who own these houses to move out into other accommodation and for the younger generation and the single person to move in. They are willing to pay a reasonable rent. They want nothing other than the opportunity

to enter into a contract from one to three years, with the guarantee that at the end of that period they will be moving on.
I agree with the suggestion that we need a Select Committee of the House to deal with these matters. It is not until one has heard the whole of a debate that it is possible to see what has been left out, and that there are needs such as those I have mentioned.
These things can be done, but let us on the Conservative side not be afraid that a Labour Government will come back and ditch the measures that have been carried into effect. These measures must be taken if we are to have a really effective housing policy, such as that to be found in Germany today.

9.15 p.m.

Mr. Arthur Latham: I wish to apologise to my right hon. Friend the Minister for Housing and Construction for the fact that although I wish to put two questions to him I shall not find it possible to be in the Chamber when he replies. This is somewhat ironic, because during the last housing debate, when I put a number of points to him, he was not able to reply to them because he was peppered with partisan points by the Opposition Front Bench and was never able to deal with those serious housing questions. I understand that he is still in process of replying to those queries that he was not able to deal with on the previous occasion.
I wish to put these points to the Minister because I do not know what to say to private tenants in my constituency who look to a Labour Government for some protection in facing rent increases of £300 a year over a three-year period. I emphasise that I am referring to increases of that nature and not to total rent. I have given the Minister a number of examples in numerous letters to him, Furthermore, I have written on this subject to the Secretary of State for the Environment and to the Prime Minister. I have now returned to the sort of occasion on which I originally put these questions—namely, in a housing debate. The Government appear to regard rent increases in some parts of London as excessive but exceptional. Therefore, they are not prepared to use their power to fix either a percentage or a cash ceiling.
I repeat that I do not know what to say to tenants who face excessive rent increases and who feel that they can turn to nobody for protection. It will be no comfort to them to say, as has been outlined by the Opposition Front Bench, that if the Conservatives are returned to power they will operate a free market in the private sector. The fact that those tenants might suffer even more will give them no reassurance.
What appears to have been ignored by the Department of the Environment was illustrated by what was said by the hon. Member for Kensington (Sir B. Rhys Williams), who spoke about the letter in The Times from Sir Malby Crofton and the pressure that was being applied. Pressure from those who can pay a good deal for their accommodation is not a new feature in Westminster, Kensington or Chelsea. Recent events may have added an additional dimension, but the effect of the kind of rent increases that I have constantly described to the Minister will change altogether the social character of these parts of central London. In future, it will no longer be possible for a family living on ordinary means to think in terms of making their home in those parts of London. It will be no use pointing to local authority property, because, as the Minister will know from his constituency in Brent, there is a tendency for local authorities, particularly Tory-controlled authorities such as Westminster, to look at the level of private rents and then to examine local authority rents and consider setting them at a new high level.
When I hear my hon. Friend the Member for Salford, East (Mr. Allaun) and others talk of the rent levels obtaining in other parts of the country I emphasise to them that ordinary local authority tenants in my constituency are being asked to pay rents of £14 and £15 per week as the norm. If the Government want to see a reasonable mixture of population in central London, if they want ordinary working people, including higher-earning working people, to take the opportunity to make their homes in central London, they will have to take action soon to stop these excessive rent increases. These people will be driven out of the centre of the Metropolis. That is not good for London and it is not good for my constituents.
I have on numerous occasions sent to the Minister letters from my correspondents, and he has a file corresponding to mine. It is a large one, involving individual cases in my constituency. I have also sent evidence about neighbouring districts that are similarly affected. Action is necessary, and I again appeal to the Minister to offer a glimmer of hope to these people, who are entitled to look to the Government for protection.
I wish to mention another related matter, concerning the National Empty Properties Campaign, which held an exhibition on the Interview Floor of the Palace of Westminster last week. The exhibition was attended by a number of hon. Members. An interesting development of the campaign is that although it started in Westminster—indeed, in Paddington—there is now a countrywide response to the campaign. At the exhibition last week there were representatives from not only London but Cardiff, Bristol, Nottingham, Sheffield and many other parts of the country. They made the point that this is not simply a London problem but a growing one in most urban centres.
During the last housing debate the Government announced that there was to be a pilot survey of empty properties. My hon. Friend the Member for Salford, East has tried to introduce a requisitioning Bill. I was able to present it on his behalf on one occasion—albeit unsuccessfully.
My hon. Friend and I, and other hon. Members, thought that here at last was some indication of Government action. We believed that the problem had been identified, that there would be a pilot survey, and that some useful action could be anticipated. I recently tabled a Question on this point and the reply indicated that the pilot survey would be made at some time in the future, perhaps in July or August. The survey will look at empty properties and return six months later to find out whether they are still empty and, if so, inquire why. I suggest that the approach shows an abysmal unawareness of the urgency of the problem and of the need for Government action. We are speaking about the homeless in London and elsewhere in the country who want a response from the Government that will be much more immediate than a long-term survey and


pilot inquiry and, presumably, another long pause before action is contemplated.
I must remind the Government that during the last debate on housing one of the Opposition speakers suggested that a variety of actions might be taken to try to overcome the problem of empty properties. I readily responded to that, and suggested that it might be helpful if, instead of having a pilot survey, a report and a long pause, with heaven knows what action at the end of it, the Government now considered attempting to get through the House—and this might not be impossible—enabling legislation that would permit schemes to be promoted, particularly in stress areas where there is a high incidence of empty property. I offer Westminster and Paddington as ready examples. Such a scheme should be along the lines suggested by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) this evening. He talked not about requisitioning—that raises hackles among hon. Members opposite; they go white at the thought—but about a scheme in which an administrative order could be made by a local authority. The property could be occupied and the rates calculated and paid.
Little more than that was involved in the requisitioning Bill that we attempted to bring before the House. It is merely a system of trying to ensure that the many thousands of empty properties are put to a useful purpose, at least for a limited period. I urge the Government not to tinker further with pilot schemes but to come forward with positive proposals that will help to overcome the problem, at least in some parts of the country.
Has the Department any figures to convince it of the scale of the problem or to confirm various claims that are being made? For example, it is said that there might be between 120,000 and 200,000 empty properties in the London area. If only half of these properties could be occupied it would be a substantial contribution towards dealing with the problem of homelessness. Similarly, if powers could be introduced countrywide it would save much misery and anguish among people who need homes and who see empty houses around them over which no action is being taken.
I still insist that the Rent Act 1974 has done little to contribute to the problem. This problem was here long before the Act. I believe that many landlords keep some properties empty as a hedge against inflation—as part of a deal in a multiple transaction that may take place. If the Government made a sympathetic response to the idea of a system of compulsory, albeit temporary, letting, it would be unnecessary to use that power. The mere fact that there was the possibility of such action would have a salutary effect on landlords who keep properties empty.
I shall not be here for my right hon. Friend's reply, but I hope that he will answer the points that I have raised and that I shall be able to read them in Hansard. There is a need to do something about excessive rent increases in the private sector and a crying urgency to see that empty properties are occupied by homeless families.

9.28 p.m.

Mr. Hugh Rossi: In view of the lateness of the hour and the limited time left to me and the Minister to reply, I hope that the House will forgive me if I address my remarks mainly to the speech of the Secretary of State and do not refer to the many valuable points made by other hon. Members.
The right hon. Gentleman started by commenting on the Community Land Act and claimed that it had had great success on the basis of its having stabilised land prices. The Secretary of State should not treat the House as if it were completely naive. He knows as well as we do that so little land is now changing hands that there can hardly be said to be a market at all. There are insufficient deals to establish a price.
I am not saying this just for the sake of scoring party points. It is being said by non-political organisations which are desperately concerned with the development and provision of housing. The House-Builders Federation and the National Federation of Building Trades Employers are desperate about the effects that the Act is having and will have on the supply of land for housebuilding if it is allowed to remain on the statute book.
The hon. Member for the Isle of Wight (Mr. Ross) said that there was some merit in the Act and wondered what we would


do if we repealed it—as we shall. He indicated that there was a need for local authorities to have some power to marshal land. I accept that local authorities should have that power and should be able to arrange for the development of the land in partnership with private developers.
There is also a need for local authorities to have the power to deal with land in the interests of what is now called positive planning. That can be done readily by simple amendments to the existing town and country planning legislation—for example, by amending the powers of acquisition possessed by authorities. What is not necessary is all the bureaucratic nonsense contained in the Community Land Act—for example, disposal notification areas and the suspension of planning permission for a private developer while the local authority makes up its mind whether it chooses to carry out the development. When that situation is coupled with a rate of development land tax of between 66 per cent. and 80 per cent., what more could one envisage as creating a land shortage? If we wished deliberately to create a land shortage, we could not go about it any better than by introducing the measures that we have in the Act, which is a complete discouragement to anyone to bring forward land for development purposes.
I have mentioned the house building industry and the Secretary of State has made reference to it. The right hon. Gentleman took an extremely complacent view. He tended to brush aside the difficulties that the industry faces. He said that the present taxation measures do not really impinge upon the industry. I wish that he had been there—and I do not recall whether the right hon. Gentleman was—when we debated the construction industry a few weeks ago. If he had been in the Chamber he would have realised that the industry was going through a worse period than in the 1930s. There are about a quarter of a million unemployed in the construction industry. The right hon. Gentleman surely cannot sit back and make the complacent and bland statements that he made this afternoon.
I wonder whether the right hon. Gentleman read the Architects' Journal of 15th June 1977. It states that one in three

architects will be unemployed within two years. It continues:
Architects are at the mouth of the pipeline which leads from the client to the worker on on the sites. … No one can calculate the figure accurately',
but, given the work load of architects at the moment, there will be at least 400,000 unemployed in the construction industry next year unless the Government take action.

Mr. Shore: I know that the hon. Gentleman wants to be fair. What I was saying in the context of the building industry was not to deny the great problems which it faces, which I fully understand, but to put to the hon. Gentleman the question of whether he agrees that the major problem facing the industry is a lack of demand, and whether in the light of that his party's policy of discouraging new local authority building would have the effect of damaging rather than helping the industry.

Mr. Rossi: The Secretary of State cannot slide out of it in that way. He knows that it is patently not true. Demand is a factor, but what creates demand? Who is responsible for the economic climate today? What stimulates or does not stimulate demand? The responsibility lies with the Labour Cabinet for the state in which the nation now finds itself and for the state in which the construction industry finds itself.
The Secretary of State took an equally sanguine view of housing starts and said that in the private sector these were holding steady. There has been a consistent and continual decline since last autumn. At this time last year housing starts were running at about 30,000 a month. Today there are 15,000 a month. That is not something that the right hon. Gentleman can brush aside. Orders, which are the starts of tomorrow, are 25 per cent. down on last year. An even more significant figure is the stock of bricks and cement, which is a sensitive indicator of the amount of activity that is taking place in the house building and construction industry. The brick stocks are mounting month by month and they are in their hundreds of millions. If the Government are not careful, they will soon be at 1,000 million. We shall have a brick mountain.

Mr. Norman Tebbit: Give him a free vote on it and see which way he goes.

Mr. Rossi: The Labour Government invented the brick mountain long before the European Community ever thought of any mountains. We have seen this situation before. It took place in 1964–65.
I turn to the public sector. The right hon. Gentleman is always ready to put the blame on someone else for a disappointing performance. The scapegoats are the Conservative-controlled local authorities which have recently come into office and have inherited a reduction in the rate support grant and high interest rate charges. These problems have been created by the Government. The Undersecretary of State for Wales is a more truthful man than the Secretary of State, because he said that the difficulty was spread equally between Conservative-and Labour-controlled authorities.
Of course, when it is not the local authorities it is the weather. That is the other alibi. The wet weather is now responsible for the lack of building. It is on those feeble excuses that the record of the Secretary of State and the Government will be judged.
The right hon. Gentleman told the House that we must accept that there has been a reduction in applications for improvement grants, but he did not tell us that it was a reduction from 450,000 in 1973 to 150,000 in 1976—a fall in expenditure from £840 million to £470 million. The Secretary of State said that was the fault of the 1974 Act—which, incidentally, the Labour Government brought in. The Conservatives were party to that Act, I agree. But the Act gives the Minister power to adjust rateable values above which improvement grants cannot be claimed. It lies within his power to increase improvement grants. Despite urgings from both sides of the House for several years, he has done nothing to increase the level of improvement grants.
The maximum eligible expense of £3,200 for each improvement is also totally out of date. The average cost of an improvement in London is £7,500, and it is £4,500 elsewhere. In view of the level of grant that is applicable today compared with the actual cost of improvement, few people are prepared to put in applications. What are the Government doing to encourage applications? If they encouraged applications, they would help

the house building and construction industry and deal with the housing problem in a way that we would like to see.
The Secretary of State said that, in terms of quality and quantity, Britain is now one of the best-housed countries in Europe. I accept that the problem is no longer the overall shortage of houses. We have about 20 million houses in this country as against 19 million households. Therefore, we have a crude surplus. The right hon. Gentleman said that we had built about 7½ million houses in the last 25 years. The problem is not the quantity, because we are in surplus, but, to an extent, the quality, because within the total of 20 million houses about 2 million are unfit or are lacking in basic amenities.
We have consistently and persistently urged that there should be a redirection of resources in this area, but the Government have consistently failed to take action. Instead, we have seen this tremendous decline in the number of improvement grants and in the supply of money that has been made available for this purpose. That is understandable because the Government entered office on a policy of massive, indiscriminate expansion of local authority building. As a result, they neglected the existing housing stock.
A change of heart has been announced today. I am glad to hear from the Secretary of State that he is now to give local authorities block grants within which they will be able to choose whether they use the money for new council house building or for the improvement of housing stock. Now that they have been given this discretion and flexibility, I hope that we do not hear again the argument against certain authorities that they are not building as many houses as they should, particularly if they are spending money in the way in which I think the House would like them to spend it—on improving the existing housing stock which is in surplus.
We believe that local authorities should concentrate new building on the sectors of the community that are not able to help themselves—the elderly, the disabled and those in need.

Mr. Heffer: Surely the hon. Member must agree that if a local authority is getting out of balance—for example, in


certain areas where there is a need to build houses—and it is not building but is concentrating on improvements, we have a right to criticise it.

Mr. Rossi: If that is what authorities are doing, I agree. However, the authorities that are usually criticised are those that tend to concentrate on improvement when they can do so. That has been the picture so far.
It is often said that the housing figures of the Conservative Government were not as good as those of Labour. If one takes a combination of new houses built and improvements and compares the records of the two Governments, one finds that in 1973 the Conservative Government improved or built 747,000 compared with 493,000 built or improved by this Government. The Labour Government have shamefully neglected the need for improvement.
I had intended to deal with other matters, particularly those mentioned by the Secretary of State and the financial review that he will be introducing next week. I wanted to deal with the challenge he made to us about the increase in council rents and the question of a contribution of 7 per cent. of average income towards council rents. I have not the time to go into detail.
From the statements by the Secretary of State, it appears that he does not really want to do much at all either with council rents or with mortgage interest rates but that some minor adjustments must be made. One can only conclude that he does not want to offend the 30 per cent. of people who live in council houses by putting up their rents too much or the 53 per cent. of people who live in owner-occupied houses by tinkering around too much with mortgage relief. I can only take that as an indication of a General Election in the near future.

9.44 p.m.

The Minister for Housing and Construction (Mr. Reginald Freeson): I shall try to deal with as many as possible of the points that have been raised in the debate. Most of the general points that were raised by the hon. Member for Hornsey (Mr. Rossi) and other hon. Members were dealt with in the opening speeches. Following the publication of the Green Paper next week we shall begin

a major debate and consultations on a whole range of matters which are the subject of today's debate.
A great deal of play has been made of the improvement grant position. I accept that the situation has been accurately described. There has been a major reduction in the number of improvement grants, partly because of the general state of the economy and partly because of the state of the housing market, but also arising from the operation first of all of the 1974 Act and, more particularly, the ending of what was known to be the temporary Act passed by the previous Government. I have before me a summary of that Government's White Paper dealing with this issue particularly. I shall not go into all the details of it, but I shall quote some significant figures.
The Act in question was described as a temporary Act, due to end in June 1974. The number of improvement grants, which had stood at 57,000 in the first quarter of 1974, dropped to 17,500 in the first quarter of 1975, after the ending of the temporary Act. That was the major single cause of the drop in improvement grants. There were two or three areas in which that special Act operated chiefly as a counter-unemployment measure, which had increased the percentage of improvement grants in large parts of the country; but it had also given rise to a whole range of abuses which the then Government themselves described in their own White Paper before they left office and which they made recommendations to deal with in a draft Bill published just before the 1974 election.

Mr. Heseltine: Then why is it that, nearly two years later, the Minister has not introduced legislation to deal with the abuses and to replace the facilities so that the flow of improvement grants can go on?

Mr. Freeson: The hon. Gentleman is wrong. We introduced the Housing Act 1974, which in this respect was based largely on the recommendations in the draft Bill which the previous Government had published. So we have introduced the very legislation which he suggests we should now introduce.

Mr. Michael Morris: Mr. Michael Morris (Northampton, South) rose——

Mr. Freeson: No, I will not give way. I have very little time and the hon. Gentleman has not been in the Chamber very long. I want to deal with points put to me—[HON. MEMBERS: "Give way."] It would help the House if the Opposition stopped turning housing debates into barnstorming acts every time we had one.

Mr. Michael Morris: Mr. Michael Morris rose——

Mr. Freeson: 1 will not give way. I wish to deal with as many of the individual points—[Interruption.] Does the hon. Member for Henley (Mr. Heseltine) want to intervene again?

Mr. Humphrey Atkins: Get on with it.

Mr. Freeson: The Opposition Chief Whip should hold his tongue.
A number of points have been made about this Government's record in both the public and private sectors. Whatever the hon. Member for Hornsey may have said and no matter what is said by those who seek to interrupt me, when this Government came to office there was a total collapse of the house building programme in both sectors. We have since then increased building in the public sector from a little over 100,000 dwellings a year to between 150,000 and 170,000. In the private sector, of which the Conservative Party is so proud, they produced a situation in which a figure of 200,000-odd dwellings collapsed to just over 100,000 when they went out of office. There were 65,000 newly-built houses on the market which had been unsold for more than six months when we came to office.
We have reversed that trend. There have been increases in the private and the public sectors of up to 40 and 50 per cent. taking one year with another. We are holding that course steady, no matter what Conservative Members may say.
There were suggestions that the Community Land Act had something to do with holding back land from the housing market. There is no evidence for this from house builders; none of them has suggested it. Despite their feelings about the Act, they are not arguing that it is responsible for holding back land. In the first year of operation of the Act, more land was purchased by local authorities than was forecast. The forecast was for

1,200 acres, but in the event over 1,500 acres were purchased, half of which was for housing purposes. In 1977–78 we shall see something of the same order of activity on expenditure of resources.

Mr. Heseltine: Mr. Heseltinerose——

Mr. Freeson: No, I shall not give way. I offered to give way to the hon. Member a few minutes ago and he did not take the opportunity.
The point has been made about the operation of the Rent Acts. I restate that there is no evidence at all to suggest that the Rent Acts have dried up the supply of private rented accommodation. What is more, I put the question once more to Opposition Members, in particular to the hon. Member for Hornsey: if they were so strongly against the Act—and for three years they have opposed it—why did they not vote against it in 1974 when they had the opportunity to do so? I invite the hon. Member for Hornsey to tell us the reason on some other occasion. He did not vote against the 1974 Rent Act but he has spent the last three years attacking it. Yet he has not told us why he has turned his back on the Rent Act when his own party supported it when they were in office and refused to vote against it when it was introduced. [Interruption.] I wish that the Opposition Chief Whip would maintain silence.

Mr. Rossi: Mr. Rossi rose——

Mr. Freeson: No, I shall not give way. I have not much time.

Mr. Rossi: On a point of order, Mr. Deputy Speaker. The Minister has asked me three times to answer a question, and when I try to do so he will not let me. Will you rule that he should allow me to answer his question?

Mr. Deputy Speaker (Mr. Oscar Murton): That is entirely within the discretion of the Minister.

Mr. Freeson: The hon. Member for Hornsey can answer the question on any other occasion that he wishes. I find the behaviour of hon. Members on the Opposition Benches very interesting. I voted against the televising of the House, but I think it would be interesting to see this kind of conduct on the screen. Hon. Members opposite must contain themselves. This jack-in-the-box behaviour serves no particular point.
In the limited time that the Opposition interrupters and barnstormers have left me, I shall deal with the few points that were put to me by hon. Members who were in the House throughout the debate. The point was made by the hon. Member for Henley about a review of planning procedures. We have done that and we shall issue very shortly a revision of the General Development Order as a result of that review. I ask the House to await its publication. The hon. Member for Horasey was one who participated in the review——

Mr. Rossi: That was not a review of the planning system.

Mr. Freeson: I ask the hon. Member to await publication, and then he will know.
The hon. Member asked us—others supported him—to undertake arrangements to encourage leasing of empty property by local authorities. We are already doing so. At least two dozen authorities are doing this. We are encouraging them. We will continue to do so.
The hon. Gentleman asks us to support a policy of switching over to gradual renewal and rehabilitation and to stop the bulldozer. We are doing so. It is already policy.
The hon. Gentleman asked us to undertake a review of the operation of the Rent Acts generally—not just the 1974 Act. We are reviewing the operation of the Rent Acts. Specifically in answer to the hon. Member for Isle of Wight (Mr. Ross), I have asked officials to consider any relevance that the Landlord and Tenant Act 1954 might have to that review. I await the advice of my officials on that matter.
It has been suggested that there should be an increase in the activity of local authorities in rehabilitation outside improvement grants. Today we are providing about five times as much capital, in real terms, as was proposed by the Tory Government when they went out of office. In 1977 nearly £600 million is being spent by local authorities and housing associations, or provided for them, for the purposes of conversion, modernisation and rehabilitation, as compared with a figure of little more than £100 million provided by the Tory Government when they were in office and the election was called. We

are increasing the provision. We do not have to plan to do the things suggested, because we are already undertaking to do them. Hon. Members should ask the tenants who are occupying the modernised properties whether they notice the difference.
We are already undertaking policies for alternative kinds of tenancy. The fastest growing kind of tenancy in the country is the co-operative tenancy. We are backing housing associations and local authorities in undertaking this.
However, we intend to press ahead with a new building programme. The hon. Member for Hornsey said that if freedom were given to local authorities to switch from one kind of expenditure to another we could not complain if they spent more on rehabilitation than on new buildings. I shall not spend too much time on that argument. There is much more involved in the housing investment programme that we are putting to local authorities than that simple proposition.
On the evidence so far coming to us, there are local authorities which have decided to cut their house building programme without switching their resources to rehabilitation.

Mr. Michael Morris: The Minister does not let them switch.

Mr. Freeson: They are not switching. That is the point. They are cutting.

Mr. Michael Morris: Mr. Michael Morrisrose—

Mr. Freeson: The point is that local authorities are not switching their expenditure; they are cutting it. We have already undertaken to switch those allocations to other local authorities which are prepared to take up that expenditure. We have started to do so. I urge hon. Members on the Opposition Benches to persuade their stress area authorities now under Conservative control to maintain the building programmes that those authorities put to my Department, in addition to their rehabilitation policy. That is their responsibility. It is not good enough for Opposition Members to talk about the switching of expenditure when in fact what is at risk is a cut in investment in total.
I have to put the question to the hon. Gentleman once more and I shall give way on this one. Does he favour——

Mr. Humphrey Atkins: Mr. Humphrey Atkins (Spelthorne)rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That this House do now adjourn:—

The House divided: Ayes 255, Noes 271.

Division No. 154]
AYES
[10.00 p.m.


Adley, Robert
Gilmour, Sir John (East Fife)
Maxwell-Hyslop, Robin


Aitken, Jonathan
Glyn, Dr Alan
Mayhew, Patrick


Alison, Michael
Godber, Rt Hon Joseph
Meyer, Sir Anthony


Amery, Rt Hon Julian
Goodhart, Philip
Miller, Hal (Bromsgrove)


Atkins, Rt Hon H. (Spelthorne)
Goodhew, Victor
Mills, Peter


Awdry, Daniel
Goodlad, Alaslair
Miscampbell, Norman


Baker, Kenneth
Gow, Ian (Eastbourne)
Mitchell, David (Baslngstoke)


Bell, Ronald
Gower, Sir Raymond (Barry)
Moate, Roger


Bennett, Dr Reginald (Fareham)
Gray, Hamish
Monro, Hector


Benyon, W.
Griffiths, Eldon
Montgomery, Fergus


Berry, Hon Anthony
Grimond, Rt Hon J.
Moore, John (Croydon C)


Biffen, John
Grist, Ian
More, Jasper (Ludlow)


Biggs-Davison, John
Grylls, Michael
Morgan, Geraint


Blaker, Peter
Hall, Sir John
Morgan-Giles, Rear-Admiral


Body, Richard
Hall-Davis, A. G. F.
Morris, Michael (Northampton S)


Boscawen, Hon Robert
Hamilton, Michael (Salisbury)
Morrison, Charles (Devizes)


Botlomley, Peter
Hampson, Dr Keith
Morrison, Hon Peter (Chester)


Bowden, A. (Brighton, Kemptown)
Hannam, John
Mudd, David


Boyson, Dr Rhodes (Brent)
Harrison, Col Sir Harwood (Eye)
Neave, Airey


Braine, Sir Bernard
Harvie Anderson, Rt Hon Miss
Nelson, Anthony


Brittan, Leon
Hastmfls, Stephen
Neubert, Michael


Brocklebank-Fowler, C.
Havers, Rt Hon Sir Michael
Newton, Tony


Brooke, Peter
Hayhoe, Barney
Nolt, John


Brotherton, Michael
Heath, Rt Hon Edward
Onslow, Cranley


Brown, Sir Edward (Bath)
Heseltine, Michael
Page, Rt Hon R. Graham (Crosby]


Bryan, Sir Paul
Hicks, Robert
Page, Richard (Workington)


Buchanan-Smith, Alick
Higgins, Terence L.
Parkinson, Cecil


Buck, Antony
Hodgson, Robin
Pattie, Geoffrey


Budgen, Nick
Holland, Philip
Penhaligon, David


Bulmer, Esmond
Hooson, Emiyn
Percival, Ian


Burden, F. A.
Hordern, Peter
Peyton, Rt Hon John


Butler, Adam (Bosworth)
Howe, Rt Hon Sir Geoffrey
pink, R. Bonner


Carlisle, Mark
Howell, Ralph (North Norfolk)
Price, David (Eastieigh)


Chalker, Mrs Lynda
Howells, Geraint (Cardigan)
Prior, Rt Hon James


Clark, Alan (Plymouth, Sutton)
Hunt, David (Wirral)
Pym, Rt Hon Francis


Clark, William (Croydon S)
Hunt, John (Bromley)
Raison, Timothy


Clarke, Kenneth (Rushcliffe)
Hutchison, Michael Clark
Rathbone, Tim


Clegg, Waller
Irving, Charles (Cheltenham)
Rawlinson, Rt Hon Sir Peter


Cockcroft, John
James, David
Rees, Peter (Dover amp; Deal)


Cooke, Robert (Bristol W)
Johnson Smith, G. (E Grinslead)
Rees-Davies, W. R.


Cope, John
Jones, Arthur (Daventry)
Renton, Rt Hon Sir D. (Hunts)


Cormack, Patrick
Jopling, Michael
Renton, Tim (Mid-Sussex)


Corrie, John
Joseph, Rt Hon Sir Keith
Rhodes James, R.


Costain, A. P.
Kaberry, Sir Donald
Rhys Williams, Sir Brandon


Crouch, David
Kellett-Bowman, Mrs Elaine
Ridley, Hon Nicholas


Crowder, F. P.
Kershaw, Anthony
Ridsdale, Julian


Davies, Rt Hon J. (Knutsford)
Klmball, Marcus
Rifkind, Malcolm


Dean, Paul (N Somerset)
King, Evelyn (South Dorset)
Rippon, Rt Hon Geoffrey


Dodsworth, Geoffrey
Kitson, Sir Timothy
Roberts, Wyn (Conway)


Douglas-Hamilton, Lord James
Knox, David
Ross, Stephen (Isle of Wight)


Drayson, Burnaby
Lamont, Norman
Rossi, Hugh (Hornsey)


du Cann, Rt Hon Edward
Langford-Holt, Sir John
Rost, Peter (SE Derbyshire)


Durant, Tony
Latham, Michael (Melton)
Sainsbury, Tim


Dykes, Hugh
Lawrence, Ivan
St. John-Stevas, Norman


Eden, Rt Hon Sir John
Lawson, Nigel
Scott, Nicholas


Edwards, Nicholas (Pembroke)
Lester, Jim (Beeston)
Shaw, Giles (Pudsey)


Elliott, Sir William
Lewis, Kenneth (Rutland)
Shelton, William (Streatham)


Emery, Peter
Lloyd, Ian
Shepherd, Colin


Evans, Gwynfor (Carmarthen)
Loveridge, John
Shersby, Michael


Eyre, Reginald
Luce, Richard
Silvester, Fred


Fairbairn, Nicholas
McAdden, Sir Stephen
Sims, Roger


Falrgrieve, Russell
McCrindle, Robert
Sinclair, Sir George


Fell, Anthony
Macfarlane, Nell
Skeet, T. H. H.


Finsberg, Geoffrey
MacGregor, John
Smith, Dudley (Warwick)


Fisher, Sir Nigel
MacKay, Andrew James
Smith, Timothy John (Ashfleld)


Fletcher, Alex (Edinburgh N)
Macmilian, Rt Hon M. (Farnham)
Spence, John


Fookes, Miss Janet
McNair-Wilson, M. (Newbury)
Spicer, Jim (W Dorset)


Forman, Nigel
McNair-Wilson, P. (New Forest)
Spicer, Michael (S Worcester)


Fowler, Norman (Sutton C'f'd)
Madel, David
Sproat, lain


Fox, Marcus
Marshall, Michael (Arundel)
Stalnton, Keith


Fraser, Rt Hon H. (Stafford amp; St)
Marten, Neil
Stanbrook, Ivor


Fry, Peter
Mates, Michael
Stanley, John


Galbraith, Hon T. G. D.
Mather, Carol
Steen, Anthony (Wavertree)


Gardiner, George (Reigate)
Maude, Angus
Stewart, Ian (Hitchin)


Gardner, Edward (S Fylde)
Maudllng, Rt Hon Reginald
Stokes, John


Gilmour, Rt Hon Sir Ian (Chesham)
Mawby, Ray
Stradllng Thomas, J.




Tapsell, Peter
Vaughan, Dr Gerard
Wiggin, Jerry


Taylor, R. (Croydon NW)
Vlggers, Pater
Wigley, Dafydd


Taylor, Teddy (Cathcart)
Wainwright, Richard (Colne y)
Winterton, Nicholas


Tebbit, Norman
Wakeham, John
Wood, Rt Hon Richard


Temple-Morris Peter
Walder, David (Clitheroe)
Young, Sir G. (Eallng, Acton)


Thatcher, Rt Hon Margaret
Walker, Rt Hon P. (Worcester)
Younger, Hon George


Thomas, Dafydd (Merioneth)
Walters, Dennis



Thomas, Rt Hon P. (Hendon S)
Weatherlll, Bernard
TELLERS FOR THE AYES:


Townsend, Cyril D.
Wells, John
Mr. Spencer Le Marchant and


Trotter, Neville
Whitelaw, Rt Hon William
Mr. Michael Roberts.


van Straubenzee, W. R.






NOES


Abse, Leo
Edge, Good
Lipton, Marcus


Allaun, Frank
Ellis, John (Brigg amp; Scun)
Lomas, Kenneth


Anderson, Donald
English, Michael
Loyden, Eddie


Archer, Rt Hon Peter
Ennals, David
Lyon, Alexander (York)


Armstrong, Ernest
Evans, Fred (Caerphilly)
Lyons, Edward (Bradford W)


Ashley, Jack
Evans, loan (Aberdare)
Mabon, Rt Hon Dr J. Dickson


Ashton, Joe
Evans, John (Newton)
McCartney, Hugh


Atkins, Ronald (Preston N)
Ewing, Harry (Stirling)
McDonald, Dr Oonagh


Atkinson Norman
Fernyhough, Rt Hon E.
McElhone, Frank


Barnett, Guy (Greenwich)
Fitch, Alan (Wigan)
MacFarquhar, Roderick


Barnett, Rt Hon Joel (Heywood)
Flannery, Martin
McGuire, Michael (Ince)


Bates, Alf
Fletcher, Ted (Darlington)
MacKenzie, Rt Hon Gregor


Bean, R. E.
Foot, Rt Hon Michael
Mackintosh, John P.


Benn, Rt Hon Anthony Wedgwood
Ford, Ben
Maclennan, Robert


Bennett, Andrew (Stockport N)
Forrester, John
McMillan, Tom (Glasgow C)


Bldwell, Sydney
Fowler, Gerald (The Wrekin)
Madden, Max


Bishop, Rt Hon Edward
Fraser, John (Lambeth, N'w'd)
Magee, Bryan


Blenkinsop Arthur
Freeson, Reginald
Mahon, Simon


Booth, Rt Hon Albert
Garrett, John (Norwich S)
Mallalieu, J. P. W


Boothroyd, Miss Betty
Garrett, W. E. (Wallsend)
Marks, Kenneth


Bottomley, Rt Hon Arthur
George, Bruce
Marshall, Dr Edmund (Goole)


Boyden, James (Bish Auck)
Gilbert, Dr John
Marshall, Jim (Leicester S)


Bradley, Tom
Ginsburg, David
Maynard, Miss Joan


Bray, Dr Jeremy
Golding, John
Meacher, Michael


Brown, Hugh D. (Provan)
Gould, Bryan
Mellish, Rt Hon Robert


Brown, Robert C. (Newcastle W)
Gourlay, Harry
Mendelson, John


Buchan, Norman
Graham, Ted
Mikardo, Ian


Buchanan, Richard
Grant, George (Morpeth)
Millan, Rt Hon Bruce


Butler, Mrs Joyce (Wood Green)
Grocott, Bruce
Miller, Dr M. S. (E Kilbride)


Callaghan, Rt Hon J. (Cardiff SE)
Hamilton, W. W. (Central Fife)
Mitchell, Austin Vernon (Grimsby)


Callaghan, Jim (Middleton amp; P)
Harrison, Rt Hon Walter
Molloy, William


Campbell, Ian
Hart, Rt Hon Judith
Moonman, Eric


Canavan, Dennis
Hattersley, Rt Hon Roy
Morris, Alfred (Wythenshawe)


Cant, R. B.
Hatton, Frank
Morris, Charles R. (Openshaw)


Carmichael, Nell
Hayman, Mrs Helene
Morris, Rt Hon J. (Aberavon)


Carter, Ray
Heffer, Eric S.
Moyle, Roland


Carter-Jones, Lewis
Hooley, Frank
Mulley, Rt Hon Frederick


Cartwright, John
Horam, John
Murray, Rt Hon Ronald King


Castle, Rt Hon Barbara
Howell, Rt Hon D. (B'ham, Sm H)
Newens, Stanley


Clemitson, Ivor
Hoyle, Doug (Nelson)
Noble, Mike


Cocks, Rt Hon Michael (Bristol S)
Huckfield, Les
Oakes, Gordon


Cohen, Stanley
Hughes, Rt Hon C. (Anglesey)
Ogden, Eric


Coleman, Donald
Hughes, Mark (Durham)
O'Halloran, Michael


Colquhoun, Ms Maureen
Hughes, Robert (Aberdeen N)
Orme, Rt Hon Stanley


Concannon, J. D.
Hughes, Roy (Newport)
Ovenden, John


Conian, Bernard
Hunter, Adam
Padley, Walter


Corbett, Robin
Irving, Rt Hon S. (Dartford)
Palmer, Arthur


Cowans, Harry
Jackson, Colin (Brlghouse)
Park, George


Cox, Thomas (Tooting)
Jackson, Miss Margaret (Lincoln)
Parker, John


Crawshaw, Richard
Janner, Grevllle
Parry, Robert


Cronin, John
Jeger, Mrs Lena
Pavitt, Laurie)


Crowther, Stan (Rotherham)
Jenkins, Hugh (Putney)
Pendry, Tom


Cryer, Bob
John, Brynmor
Perry, Ernest


Cunningham, G. (Islington S)
Johnson, James (Hull West)
Prescott, John


Cunningham, Dr J. (Whiteh)
Johnson, Walter (Derby S)
Price, William (Rugby)


Davidson, Arthur
Jones, Alec (Rhondda)
Radice, Giles


Davies, Bryan (Enfleld N)
Jones, Barry (East Flint)
ROM, Rt Hon Meriyn (Leads S)


Davies, Denzll (LlanelH)
Jones, Dan (Burnley)
Richardson, Miss Jo


Davies, Ifor (Gower)
Kaufman, Gerald
Roberts, Albert (Normanton)


Davis, Clinton (Hackney C)
Kelley, Richard
Roberts, Gwllym (Cannock)


Deakins, Eric
Kerr, Russell
Robinson, Geoffrey


Dean, Joseph (Leeds West)
Kikoy-Silk, Robert
Roderick, Caerwyn


Dell, Rt Hon Edmund
Kinnock, Nell
Rodgers, George (Chorley)


Dempsey, James
Lamble, David
Rodgers, Rt Hon William (Stockton)


Doig, Peter
Lamborn, Harry
Rooker, J. W.


Dormand, J. D.
Lamond, James
Rose, Paul B.


Douglas-Mann, Bruce
Latham, Arthur (Paddinglon)
Ross, Rt Hon W. (Kllmamoek)


Duffy, A. E. P.
Leadbitter, Ted
Rowlands, Ted


Dunn, James A.
Lee, John
Ryman, John


Dunnett, Jack
Lestor, Miss Joan (Eton amp; Slough)
Sandelson, Neville)


Dunwoody, Mrs Gwyneth
Lever, Rt Hon Harold
Sedgemore, Brian


Eadie, Alex
Lewis, Ron (Carlisle)
Selby, Harry







Shaw, Arnold (llford South)
Taylor, Mrs Ann (Bolton W)
White, James (Pollok)


Sheldon, Rt Hon Robert
Thomas, Jeffrey (Abertillery)
Whitlock, William


Shore, Rt Hon Peter
Thomas, Mike (Newcastle E)
Willey, Rt Hon Frederick


Short, Mrs Renée (Wolv NE)
Thomas, Ron (Bristol NW)
Williams, Rt Hon Alan (Swansea W)


Silkin, Rt Hon S. C. (Dulwich)
Thorne, Stan (Preston South)
Williams, Alan Lee (Hornch'ch)


Sillars, James
Tierney, Sydney
Williams, Rt Hon Shirley (Hertford)


Silverman, Julius
Tinn, James
Williams, Sir Thomas (Warrington)


Skinner, Dennis
Tomlinson, John
Wilson, Alexander (Hamilton)


Small, William
Torney, Tom
Wilson, Rt Hon Sir Harold (Huyton)


Smith, John (N Lanarkshire)
Tuck, Raphael
Wilson, William (Coventry SE)


Snape, Peter
Varley, Rt Hon Eric G.
Wise, Mrs Audrey


Spearing, Nigel
Wainwright, Edwin (Dearne V)
Woodall, Alec


Spriggs, Leslie
Walker, Harold (Doncaster)
Wool, Robert


Stallard, A. W.
Walker, Terry (Kingswood)
Wrigglesworth, Ian


Stewart, Rt Hon M. (Fulham)
Ward, Michael
Young, David (Bolton E)


Stoddart, David
Watkins, David



Stott, Roger
Weetch, Ken
TELLERS FOR THE NOES


Strauss, Rt Hon G. R.
Weitzman, David
Mr. Joseph Harper and


Summerskill, Hon Dr Shirley
Wellbeloved, James
Mr. James Hamilton.


Swain, Thomas
While, Frank R. (Bury)

Question accordingly negatived.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,


That the New Towns Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr.Coleman.]

Orders of the Day — NEW TOWNS BILL

Considered in Committee; reported, without amendment.

10.20 p.m.

The Under-Secretary of State for the Environment (Mr. Guy Bamett): I beg to move, That the Bill be now read the Third time.
On Second Reading the Opposition suggested that the House was being asked to authorise an additional £1,000 million expenditure of public money without any proper explanation of how this money would be spent, and over what period. In fact, about three-quarters of the money is required to finance programmes covered by the recently published White Paper on the Government's expenditure plans, Cmnd. 6721.
These plans provide for an annual rate of investment in new towns over the next few years of about £300 million per year; over half of that would be for housing, the remainder for roads, water and sewerage, environmental expenditure and the building of shopping centres, offices, factories and the many other developments which go to make a town. These are firm plans, though as the White Paper made clear the later years are subject to review by Ministers in this year's Public Expenditure Survey. However, this money Bill is not seeking to raise the borrowing limit any further than would be required to finance the programme into the second half of the financial year 1979–80. The requirement is thus over a relatively short period of two to two and a half years and relates largely to expenditure which will arise from contracts let in 1977 and 1978.
In addition, the borrowing limit had to provide for about £100 miflion per year which we estimate will be needed to finance revenue deficits—largely in the second- and third-generation towns-caused by inability to meet interest charges out of rents at this early stage of the towns' development.
I want to deal with the suggestion that new town commercial and industrial assets are so valuable that in a very short time very large capital sums might be

raised to fund other development in new towns or, indeed, elsewhere. Frankly, the assertion that disposal of those assets should become a significant, or, indeed, the only, instrument of funding policy is just not good enough. In the debate on Second Reading the hon. Member for Aylesbury (Mr. Raison) said:
There are a number of arguments in the property and new town worlds as to the most appropriate use to be made of these assets. I do not wish them to do other than act in the most effective and businesslike manner".—[Official Report, 15th June 1977; Vol. 933, c. 448.]
How right he was!
It is absolutely vital that the complexity of the background to the creation of the assets since the new town programme began is fully understood. The structure of the holdings in terms of the leasehold intrests which attach to them, the rates of return and the existence or otherwise of the opportunities of review of rentals have to be taken into account. A fundamental analysis of these interests would have to be undertaken so that a realistic assessment could be made not only of the likely market value of those assets which might be selected for disposal but also to form some assessment of the financial loss which might be incurred by premature disposal, and at the heart of the exercise is the identification of the precise kind of interest which might be disposed of, for there is little doubt that outright disposal of freeholds which are, for instance, subject to long leaseholds at low annual rentals without review clauses—which was certaily the acceptable thing in the early days of the new towns—could be an irresponsible short-term activity.
In the last 20 years attitudes towards the terms on which sub-interests have been arranged have changed. Between 1957 and 1961, 25- to 21-year periods for reviews of terms were usually adopted. By 1967 14-year review periods were being adopted, and over the last 10 years we have moved to review periods of seven to five years, which are now the custom. This fact alone must have a significant bearing on the proceeds likely to be obtained from a policy of disposals as apparently now advocated by the Conservative Party. I really wonder whether this is something it realises. The truth is that many very large-value increases are locked in for various periods, in some


cases up to 70 years. If the value of the reversion were negligible there might be a case for selling the locked-in interest, but there may well be an equally strong case for holding assets to take advantage of a reversion which is in sight and calculable.
The assets we are talking about in the general category of commercial and industrial are factories, warehouses, service industries, shops, offices and ancillary town centre buildings. These exist in a number of locations built at different times which, as I said earlier, have changed over the years.
The Conservative Party has made the point that the Government should adopt a positive policy of capitalising on new town assets to provide funding for ongoing development. My right hon. Friend has indicated that he is considering the idea. He gave that indication before the debate on the Second Reading of the Bill. But I hope hon. Members will realise that the examination of the possibilities, the arguments for or against and the organisation and basis of a marketing exercise of great complexity would be an operation demanding the attention of the highest skills and a very real understanding of what is likely in the short term and what is at stake in the long term.
What is certain is that the analysis of the proposition and, if it were to be adopted, the establishment of a marketing strategy and organisation could not take place in a time scale which leads to a conclusion that the provision made in the present Bill is not required. It is against this background that we are considering the whole future of new town assets and the possibility of their revaluation.
I ought, too, to point out the legal position. There is no power in the New Towns Act 1965 for a development corporation to dispose of land except in the interest of securing the development of the new town in accordance with proposals approved by the Secretary of State. Thus, a development corporation realising some of its assete would have to apply the proceeds to further development in the same town.
In the absence of a positive arrangement whereby all sale proceeds were recovered by the Exchequer and specifically earmarked for further new town

funding, as the law stands neither the commission nor development corporations could dispose of their assets for the purpose of utilising the proceeds for the benefit of other developing towns. New legislation would be required. In other words, whatever proceeds could be got from disposals would go to the Exchequer and would then have to be loaned out again to the newer towns. This emphasises again the need for the Bill now before the House.
Contained in the Opposition's case was the reference to Recommendations 10 and 11 of the Expenditure Committee's Report; namely, that new towns should be able to borrow other than from the National Loans Fund, and be allowed greater flexibility generally in their borrowing powers. No one to my knowledge has advanced any convincing argument why new town corporations should be made the exception to the general rule that public corporations in general borrow from the NLF.

Mr. Peter Hordern: Surely that is not the case with the nationalised industries, which borrow very heavily directly themselves, and also the local authorities. Therefore, why should it extend solely to the public corporations?

Mr. Barnett: With respect, local authorities are in quite a different situation from new town corporations. They are independent bodies which operate independently financially, as the hon. Gentleman well knows, whereas the new town corporations are public bodies operating in a field where they are primarily interested in long-term finance. The hon. Gentleman should bear this very much in mind. It is in that sense that they are obviously appropriately provided for by the National Loans Fund. They will attract funds—this is the danger—which are already destined for the gilt-edged market.
The Opposition have not questioned the arguments contained in the Government's response to the report in Cmnd. 6616. The Government examined Recommendations 10 and 11 with great care but came to the conclusion, for the reasons given in that document, that it would not be in the national interest, or in the interests of the new towns themselves, to adopt them.
There is one area that we are looking at, and that is bridging finance. We hope to make some progress on this soon. In that respect new towns are looking for short-term finance. In general, any fair examination will show that new towns have done pretty well out of the NLF, and the fact is that they are usually borrowing to fund long-term investment.

Mr. Arthur Jones: There is great interest in the new towns being able to borrow in the open market rather than from the National Loans Fund. I do not think the Government have given a convincing answer, and I have studied carefully what has been said. Would that not be a means of securing the use of private resources in the new towns in addition to public funds?

Mr. Barnett: First and foremost, the new towns would be operating in precisely the field in which the gilt-edged market operates. Secondly—this is something the hon. Gentleman should bear in mind because it appears to have been ignored by the Opposition—there is the degree to which private finance is already involved in the new towns. One has only to remember the Milton Keynes shopping centre, which is another example of the way in which private finance has been secured in the new towns. Therefore, to say that private finance is not being put into the new towns does not give a true picture of the situation.
I must make clear to the House that the net effect of the House not passing this Bill—which appears to be the intention of the Opposition tonight—would probably be to bring the new towns programme to a grinding halt. It would create a great deal of uncertainty among investors and staff in the new town corporations and the people who live there.
The Joint Parliamentary Secretary to Ministry of Housing and Local Government, Mr. F. V. Corfield, introducing the Second Reading of the Conservative Government's 1964 New Towns Money Bill, said:
In asking the House for more money we are not asking for a subsidy. On the contrary, we are asking for authority to continue a policy which has been proved to be sound."—[Official Report,0th January 1964; Vol. 687, c. 724.]
I echo his views in supporting this Bill. Indeed, we are asking for money to fin-

ance a programme which has already appeared and been approved, as part of the Government's expenditure plans.
I have great pleasure in commending the Bill to the House.

10.33 p.m.

Mr. Peter Hordern: As the House will know, the Opposition voted against the Second Reading of this Bill, the principal reason being that we thought that the money involved—a borrowing of £1,000 million from the National Loans Fund—was a very large figure indeed.
In the Second Reading debate the Government made no attempt to defend the reason for borrowing such a large sum of money. I regret to say that nothing said by the Minister in his Third Reading speech has helped us. If this Bill is voted down tonight, the Government will have to bring in another Bill. The Minister said on Second Reading that the present sum of money will last until September or October. We should be satisfied if the Government were to come forward with a Bill seeking to borrow from the NLF a much smaller sum of money.
It is important to recognise how substantial this sum of money is and how inadequate are the reasons the Government have adduced for borrowing such a huge sum. A figure of £1,000 million, even by this feckless Government's standards, is still a very great deal of money. So far the new towns have taken 30 years to get through £2,250. Now the Government come forward to borrow £1,000 million which they believe will be spent in about two years. But when every other form of public expenditure is being closely examined, the Government must make out a very good case why such a large sum of money should be supplied to the new towns. They should make out a case—the Minister did not do so in his speech—for showing why moneys should be lent to new towns instead of allowing them to roll over their assets and use those assets as they are supposed to be used. If we accepted this enormous extra charge without any real explanation from the Government—and there has been none tonight—the Opposition would be failing in their duty. That is we shall vote against the Bill tonight.
We are told that the £1,000 million is supposed to run for two years; that is,


£500 million a year. The Minister said that this was in accordance with the public expenditure White Paper. However, I should like to draw the Minister's attention to the financial statement, which shows that the increase in the size of the loan from the National Loans Fund to the new towns for 1977–78 was £403 million. The £1,000 million is supposed to run for two years, so that means that this year the loan will be £500 million and not £403 million. It appears that after a few months the loan to the new towns from the National Loans Fund this year will be larger than the amount that appeared in the financial statement.
Another thing that is worthy of note is that this is the only part of the public sector to which loans are increasing—other than the National Enterprise Board and the British National Oil Corporation. The loans to local authorities and to housing corporations have been cut. Only the new towns, the NEB and the BNOC are exempt from this process. The new towns are keeping strange company. The House will know that we think nothing of the NEB and the BNOC but that we are in favour of new towns. The point was made clearly on Second Reading that the Opposition bear absolutely no antipathy towards new towns at all. It is not the Conservative Party that has ever cut back the programme for the new towns. It is this Government, and they have done so by cutting back the prospective population for the third generation of new towns by 380,000. That, as was mentioned on Second Reading, will affect the prospects of industrial firms moving to those new towns. The Secretary of State said that the reason why the new towns have been cut back is that the population is likely to be only 51 million in 1990 and not 60 million. However, that is not the only reason. The other reason is the formidable cost of expansion for third-generation new towns, and the borrowing allowed in the Bill will simply make this worse.
Up to March 1976—the latest accounts available—these third-generation new towns had borrowed £517 million between them at an average rate each of over 12 per cent. I understand that all these new towns are expected to turn over their housing to the local authorities concerned. Tbeae local authorities—particularly

Central Lancashire and Milton Keynes—had little or no existing stock of houses. Therefore, the houses are bound to command the highest rents in the country when they are handed over to the local authorities—and the largest rent rebates. It is interesting to note that the interest rate at which all these new towns borrowed capital from the Secretary of State for the Environment through the NFC was twice that of Harlow. Therefore, it cannot make sense to go on borrowing money indefinitely to build houses that nobody will be able to afford to rent.
It is also interesting that Harlow tenants are not allowed to buy their houses, while tenants in Milton Keynes or Central Lancashire are encouraged to do so. It has nothing to do with the length of the waiting list but is concerned with the cost of housing in those areas. What is the incentive for new firms to move to the new towns where the rents must be higher than anywhere else?

Mr. Stanley Newens: I am grateful to the hon. Gentleman for giving way in view of the fact that he has mentioned my constituency. Will he make clear why the people on the Harlow waiting list for rented accommodation—there is a considerable list—should be forced to wait longer? That would be the result of selling off houses. Will he give details of the way in which industrialists have been deterred from coming to Harlow because in most respects Harlow is a highly successful new town, as the hon. Gentleman will find if he examines its record?

Mr. Hordern: I am not saying that industrialists are deterred from going to Harlow. They are attracted to Harlow as they are to my own new town of Craw-ley. However, they are deterred from going to the third-generation new towns that are being cut back and are having to build at very great cost.
Our policy is plain; it is right to offer tenants the opportunity to buy their homes, first, because they want to buy and, secondly, because the money thereby released is much greater than what could be obtained from rents. The prospects of building more houses—whether in Harlow or anywhere else—must be much better.

Mr. Newens: What about the waiting lists?

Mr. Hordern: The waiting lists have nothing to do with it. The hon. Gentleman does not understand the basic economics of the matter. If the Government go on building houses only for rent, it is certain that the supply will dry up.
It is no wonder that the Government are keen that the corporations in the third-generation new towns should offer tenants the opporuntiy to buy their homes. Otherwise both rents and housing subsidies will go through the roof. Is it still Government policy that the housing assets of these new towns should be handed over to the local authorities? I assume that this is the position. Is it still Government policy that rents must be 50 per cent. of outgoings? I ask the Secretary of State about this in the previous debate. He mumbled and said that it was not Government policy. Let me remind him that the public expenditure White Paper said:
In this year the percentage of costs borne by rents, after rebates, will stay at about 43 per cent. Thereafter it is assumed that the percentage will rise so as to exceed 50 per cent by the end of the period, so enabling savings of about £180 million a year to be made by 1978–79.
Are the Government serious about making these savings? The IMF would like to know if they are not proposing to make such savings. Ministers made no attempt to answer the point in the previous debate.
I am pleased to see the Minister of State, Treasury on the Front Bench. He will recollect the Chief Secretary to the Treasury saying that the 50 per cent target for rents was "modest". No doubt the Minister of State, as an assiduous Treasury Minister, agrees.
If the Government are going to have to make sure that rents total 50 per cent of outgoings in third-generation new towns, the rents will not be less than £15 a week and might even be £18 a week. How many people will be able to afford such rents? What can be the sense of borrowing money from the taxpayer to build houses with the most expensive rents in the country—they are bound to rise faster in these new towns than anywhere else in the country—which no one can afford to pay?
Our first reason for voting against the Bill is that it offends against common sense. The second reason is that no one

can say that the new towns should be the only priority in housing. The Secretary of State agreed with this view on Second Reading, but the Government are borrowing £1,000 million for new towns, compared with £129 million for inner cities by 1979–80.
London is losing jobs at the rate of 100,000 a year, Birmingham has lost jobs to Telford and Redditch, Newcastle has lost 23,000 jobs in the past 10 years, many of them to Washington; Liverpool has lost 300,000 people in the past 10 years, many of them to Runcorn and Skelmersdale; Manchester has lost 250,000 people. What sort of priority is that?
It would have been understandable if the Government were borrowing for the resuscitation of our great cities that are fast losing industry and people, but that is not the case. They are borrowing for new towns that are already full of commercial and industrial assests, assets that could be recycled either for dockland development or for a new generation of new towns. It is no answer for the Minister to say that fresh legislation would have to be introduced. The Government are not usually backward in introducing fresh legislation. It is only now that they cannot introduce it. That is because they cannot even get it through their own party, let alone the House. They could use the money by recycling the existing funds in the new towns corporations and the Commission for New Towns.
Why should the Commission be regarded as a holding company for industrial and commercial assets? That was never the purpose of the Commission. The purpose of the Commission and the corporations is to build new towns, to develop new assets, not to keep old ones and to collect rents from week to week. For some reason the Government consider the assets of the Commission to be sacrosanct. It amazes me that the hon. Gentleman put forward the argument that if the assets were sold that might have a serious effect on the gilt-edged market. What does he think is happening in respect of the sale of BP stock? That sale will raise £450 million. That is something that could otherwise have gone to gilts.
I see that the Minister of State, Treasury nods. He is right to do so. If it


were said that the sum is even greater, that would extend the argument. I ask the Under-Secretary of State in future to take the advice of his hon. Friend the Minister of State, who will be able to fill him in on these matters. The hon. Gentleman should not suggest that that is a good reason for not selling new town assets.
It is curious that the one sector that is not allowed to buy new town assets includes pension funds and insurance companies. No, the private sector is not allowed to buy them. Those who save through their pension and insurance schemes are not allowed to do so. The only bodies that are allowed to buy them are local authorities. I do not know which local authorities will be in a position to buy these assets. Having looked at some of the accounts, I do not know of any new town local authority that can afford the price that should properly be asked.
The Under-Secretary of State and his right hon. Friend have suggested that local authorities should be expected to borrow money at 12½ per cent. to buy assets which, if they are properly valued, would give a return of 6 per cent. That is exactly what the fringe banks were doing some five years ago. That is the sort of action that commends itself to the Government. The only difference is that it takes them five years to wake up to a bad idea.
We are not against borrowing, but we are against borrowing at such a rate as to make it impossible for any return to be commensurate with the cost of borrowing. That is another reason for voting against the Bill. It is simply barmy economics. Nothing demonstrates that better than the most recent public expenditure White Paper.
We are told that £1,000 million will last two years. It has taken 30 years to spend just over £2,000 million, or just over twice as much. We are told that all this is to go to capital expenditure, such as housing and rates. I do not understand what has happened. No one seems to have told the Secretary of State that the new towns housing building programme was supposed to have been cut in the last public expenditure White Paper from £211 million in 1976–77 to £146 million this year and £143 million next year.
What is the £1,000 million that will be available to the new towns to be spent on? If it cannot be spent on investment such as building and housing, on what will it be spent? Clearly, the expansion in public expenditure will be much larger than the figure that appeared in the White Paper, which is of such concern to my right hon. and hon. Friends. It seems that cash limits do not operate in the housing sector.
Although all new town assets are supposed to rise from £78 million to £174 million in 1978–79, who will be allowed to buy them? Apparently only local authorities, which are already plunged in debt, and the tenants of the most expensive houses in the various new towns will be able to do so. How will the £174 million be got out of them? What the Government are doing is contrary to the public expenditure White Paper, against all common sense and something that this country cannot afford. That it why I ask my right hon. and hon. Friends to oppose the Third Reading of the Bill.

10.51 p.m.

Mr. Gerry Fowler: I shall be brief. I intended to speak on only one matter, but, having heard the hon. Member for Horsham and Crawley (Mr. Hordern), I now feel that I must briefly mention two other matters.
The hon. Gentleman suggested that rent levels must historically be very high in he third-generation new towns and must continue to be very high. The notion is that the third-generation new towns have small housing stocks, apart from new town housing. The hon. Gentleman has not done his homework. Telford new town, in my constituency, has in the ownership of the district council no fewer than 12,000 houses. How the hon. Gentleman can suggest that that is a small housing stock for a district with a population of only 113,000 is beyond my comprehension. I suggest that before he again speaks on this subject he should do his homework.

Mr. Hordern: Will the hon. Gentleman give the House the figures for Milton Keynes, where historically there is no large stock of houses? Indeed, there are no houses at all.

Mr. Fowler: The hon. Gentleman may be right. I was not talking about Milton


Keynes. The hon. Gentleman referred to all the third-generation new towns. What he said was wrong, and that is the end of the matter.
The hon. Gentleman suggested that Birmingham was losing jobs to Redditch and Telford. Birmingham may have lost a few jobs to Telford and, for all I know, to Redditch—which is represented by one of his hon. Friends—but he knows as well as I do that the employment situation in Birmingham is scarcely related to the jobs lost to Telford and Redditch. Most of the jobs which have gone to Redditch and Telford would not have been in Birmingham in any event. That is certainly true of Telford. Therefore, it is again false to suggest that Birmingham is in some obscure way suffering because of job loss to two new towns in the West Midlands.
The major point on which I rose to speak relates originally to what the Minister said and to the gist of the speech made by the hon. Member for Horsham and Crawley. On Second Reading and again tonight the Opposition argued that we needed a policy of roll-over assets in the new towns. I can think of a variety of reasons why such a policy might be advanced. One—I believe this to be the true reason—is that the Opposition passionately believe, as we can see from their policy on the sale of council houses, that private ownership is always superior to public ownership and that we should sell public assets into private ownership because private ownership is virtuous.
The Opposition could, of course, adduce other reasons. There is a possible argument that, in our present economic circumstances, the only way to fund new town development is by selling assets and using the proceeds for such further development. I do not believe that for a moment. Nothing suggests that we have yet reached the point where the only way to continue to fund new town development is by the sale of existing assets.
Another interesting argument—this seemed to be the one that the Opposition were deploying tonight—is the extraordinary version of the false doctrine of the hypothecation of revenue. That is the view that we should sell what exists in the new towns and apply the proceeds therefrom further to develop them. That is a nonsense doctrine. If we sell the assets of new towns, there is no good

reason why we should apply the proceeds resulting therefrom to the further development of new towns rather than to any other public purpose.

Mr. Hal Miller: That is a stupid argument.

Mr. Fowler: I hear "That is a stupid argument." Does the hon. Gentleman accept that we should go back to the 1930s doctrine of applying the proceeds of the road fund licence purely to the development of roads? We have rightly gone away from the hypothecation of revenue. It would be fatal to go back to that doctrine for the new towns. I and other hon. Members on this side of the House believe strongly that it is to the advantage of the community that we should allow these assets to increase in value in public ownership rather than to sell them off for a short-term gain and a long-term loss to the community. That is what the Opposition advocate and what can never be accepted by hon. Members on this side of the House.

10.56 p.m.

Mr. Hal Miller: I cannot follow the hon. Member for The Wrekin (Mr. Fowler), who developed many inconsistent arguments. He tried to establish the proposition that it was wrong to sell new town assets in order further to develop new towns. Why, therefore, is it right in his view to borrow? If it is right that the Government wish to develop new towns—and the hon. Member subscribes to that policy—why is it wrong to look at different sources of raising money for that purpose?
I turn to the purpose for which this huge sum of money is being spent. We have not had an adequate explanation from the Minister. I am grateful to him for alluding to various categories of expenditure but they all involved items of capital expenditure—infrastructure, roads, housing. He also included shopping centres. Why is that a necessary subject for expenditure by the Government? Even if one accepts his argument for a moment—which I do not—why is it not possible to raise other money to assist in the development of shopping centres?
My new town of Redditch has just had a session with estate agents from all over the country about the third phase of the Kingfisher shopping precinct and ways in which they can participate. Why should


such a centre be a charge on public funds, particularly when funds are short? We are not approaching this matter from a doctrinaire point of view. We are trying to develop the new town and to find resources to do so. That is a common sense approach. I agree with what my hon. Friends have said on that subject. It is not adequate for the Government to concentrate on capital infrastructure expenditure alone. That is one reason why I am so keen to get other resources in on the development.
The Government have a huge social task in the new towns. I picked up the Secretary of State on Second Reading when he said that new towns were not taking their share of the afflicted in society. I checked with my own new town and find that in the last five years, of the 2,200 rented houses, 734, or over one-third, were rented to those in the Department's own five categories of need; namely, the unemployed, the retired, the unskilled, the disabled and the single-parent families. It is not correct to say that new towns are not taking their share of disadvantaged people.

Mr. Guy Barnett: I have before me the words of my right hon. Friend the Secretary of State. On Second Reading he said:
The new towns have an important role in catering for the elderly and the disadvantaged members of the community. Their record in the provision of housing for old people is creditable, perhaps less so for the disabled, although it is improving. In my discussions with development corporations I have made it clear that I am looking to the new town to reinforce their efforts in this direction."—[Official Report, 15th June 1977; Vol. 933, c. 394.]

Mr. Miller: No, but there was a clear implication that more was expected of the new towns. I know that new towns are doing their best to take their share of disadvantaged people, but the Government have not given them the finance or the facilities for the purpose.
I do not want to rehearse again the argument about the rate support grant, but while that percentage that I mentioned of disadvantaged families have been taken into rented accommodation in Redditch, there has been no increase in the county council social services establishment in the town over that period. The means are not available, therefore, to deal with the

problem imported into that town. Forty new lettings a week are being made at the moment. This is not just a question of the Government putting money into bricks and mortar. The services for which the people depend on the Government are services for the people—social services. The Government are falling down here, and that is why I shall join my hon. Friends in voting against the Bill.

11.1 p.m.

Mr. Stanley Newens: I have listened with some scepticism to the arguments of Conservative Members to justify their voting against the Bill. I cannot believe that Conservative Members who represent new towns are engaged in anything but a shallow political manoeuvre. If it is successful, they will deprive their own and other new towns of funds, thus bringing many projects to a standstill and producing redundancies and difficulties for all who live in new towns, including their own.

Mr. Hal Miller: Is the hon. Gentleman really insinuating that there should be no care in the Government's expenditure plans for deprived people, no provision for the social services in the new towns? That suggestion is not worthy of his record in the House.

Mr. Newens: Of course deprived people should be a prime concern of this Government, but I cannot see why that means that hon. Members opposite should vote against the Bill. If funds to any new town which they represent are cut, deprived people will suffer. Hon. Members would immediately blame the Government, and would then write, protest and lead deputations to get the Government to change that expenditure decision. One reason why politicians are regarded with such suspicion is that they say one thing and do another. It is obvious that Conservative Members do not mean what they say. Is it a worthy exercise to vote against the Bill when they would be the first to protest if funds were cut off?

Mr. Hordern: The money will last certainly until the end of this year, and if the Government brought forward a Bill to raise £300 million or £400 million, we should have no objection. What we object to is the raising of a large sum with no attempt properly to use the assets of the new towns.

Mr. Newens: It is ail very well for Conservatives to say that they would not object to a certain amount of money being proposed. But immediately they say that they are conceding my case. If this Bill is defeated tonight, the result will undoubtedly be to make it difficult for new towns that are in need of funds. The hon. Gentleman cannot get away from that by fallacious and specious arguments like those he has been advancing this evening.
The argument that the new towns should sell off assets is quite fallacious. If housing assets are sold, the most attractive houses, those on which most of the loan has been paid, would be sold off first. Furthermore, as Conservatives have argued, these houses would be sold at 20 per cent. discount. That means that no development corporation, local authority or new town commission could replace a housing unit that had been sold off for as little as it was sold.
Therefore, the loan debt and the economic rent on the new houses built in place of those sold would be higher. Therefore, as the older houses were sold off the prospect of rent increases would grow greater for the remaining tenants. To lament the high level of rents that the tenants are asked to pay—which was part of the argument of the hon. Member for Horsham (Mr. Hordern)—is to shed what amounts to crocodile tears.

Mr. Hordern: Will the hon. Member tell the House whether he is against the policy of selling new town houses to tenants in third-generation new towns?

Mr. Newens: The hon. Member dodges the point by attempting to shift his ground. There is no answer to my point from Opposition Members. But I shall answer the point which the hon. Member put. Regardless of what the Government say, I do not believe it is right to sell off properties which are available for rent as long as there are people who need houses to rent and cannot afford to buy. I would apply that policy both to third-generation new towns and to others.

Mr. Guy Barnett: In the light of what my hon. Friend the Member for Harlow (Mr. Newens) said earlier, what he has just said reflects Government policy very accurately.

Mr. Newens: I believe that that is the position. But I want to make my situation quite clear. In no circumstances will I agree that it is correct to sell off housing assets while there are people who cannot afford to buy a house and need to rent. It is totally wrong. It is deprived people with whom I am concerned, and with whom the Government are concerned in bringing this Bill before the House tonight.
In voting against the Bill, the Opposition will demonstrate the damaging character of their policies for new towns. I hope that they will go to their own electorates and proclaim as loudly as possible that they are prepared to cut off the funds necessary for developing these new towns. If they do, their own populations will see very clearly what a Conservative Government would mean for the people of the new towns. It is nonsense for the hon. Member for Horsham and Crawley to suggest that we should superimpose the situation in older city centres on to new towns. The Front Bench and Back Benches on this side are equally concerned about rundown city centres and new towns. The position adopted by the Opposition on Second Reading and to-night is absolutely hypocritical, and the House would do well to demonstrate how strongly it rejects it.

11.10 p.m.

Mr. Michael Morris: I hope that the hon. Member for Harlow (Mr. Newens) will stand in the centre of Harlow and explain to the 80 per cent. of occupiers who must remain rented for ever that that is his policy and Labour Party policy. I hope that he will tour the country telling the rest of the nation that that is the position.

Mr. Newens: Let me assure the hon. Gentleman that in Harlow there is a list of people who want houses to rent but there is no list of people wanting to buy houses. I am all in favour of those who want to buy being able to buy.

Mr. Morris: They all have to live outside Harlow if they want to buy—that is clear.
I am conscious that the House has had to listen to a housing debate that left much to be desired, so I shall not detain the House for long. The key fact is that


there is disappointment on this side that what the Minister has called the Conservative new frontier of financial responsibility has been received quite so frostily by the Government. On Second Reading the Secretary of State said:
The practice of setting borrowing limits on new towns allows the House to review from time to time the progress of the new towns and the value which they give in return for the substantial public investment in them."—[Official Report, 15th June 1977; Vol. 933, c. 392.]
All that my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) has said to the House on Second Reading and tonight is that it is the rôle of the House to question, to assess and to judge what is being proposed. The Minister could do better. I have heard him do better on many subjects than he has been able to do on this Bill. He has not said to the House "In the past two years we have achieved this and that. The reason the money has run out earlier than we expected is that we have done better than we planned." We have had no assessment. There has just been a statement of the overall situation.
We have had no forecast of how long the £1,000 million is to last. We are told that it will last two years but with no firm argument. I hope that in winding up the Minister will answer some of the financial questions posed by my hon Friend. If I heard the hon. Gentleman aright, he said that the money would be spent at the rate of £300 million a year. My hon. Friend checked in the White Paper and found a figure for housing of £143 million, which is less than 50 per cent. of the annual expenditure. The figures do not tie up. It behoves the House to question.
The hon. Member for Harlow may be able blandly to assume that £1,000 million can be just tossed aside because he—in Harlow—needs a little extra money. I am prepared to stand up and be counted in Northampton and have a debate with him any time he likes in Northampton about whether the money should be just voted like that or whether the House should question and probe. I know that the people of Northampton want to question where the money is going and over what period it will be spent.
I confess to some disappointment with the Government's response about the roll-over of assets. As I understand it, the hon. Gentleman says that the Government will look at the situation, that they will undertake an assessment, that it is a complicated one, that it requires some expertise. One hopes that the expertise is readily available. That was a disappointing response, albeit a small advance.
I am also slightly disappointed that we have had no response to the proposition about the pooling of costs of new town houses in relation to sale. That would meet one of the points raised by the hon. Member for Harlow. If we were allowed to pool the cost price of new town houses and sell on the basis of the pooled cost, it would overcome certain points that have been made in the House. I believe that in the short and medium term that is the only viable way forward for substantial sales of housing assets in the third-generation new towns with substantial numbers of houses to sell.
I return to the point that my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) made so clearly. It was again symptomatic that the Minister, in his catalogue of expenditures, mentioned housing, roads and shopping centres, but made no mention of health facilities. I do not wish to bore the Minister, but this is a real problem, and the sooner his Department adds health facilities to the list the sooner we shall have a total approach to the needs of the new towns.

Mr. Timothy Raison: This debate has not focused very much on one of the facts that the Minister revealed, that £100 million a year of the sum for which he is asking is revenue deficit. It has been assumed that the money is going in capital investment. That £100 million, if applied to the great health needs in my hon. Friend's area, my own county, Buckinghamshire, and many other places, could be far better spent. What we have heard from Labour Members has been absurd.

Mr. Morris: I am grateful to my hon. Friend, who shares my regional health authority, and who, like me, is very much aware of the problems.

Mr. Deputy Speaker (Mr. Oscar Murton): Though the hour is late, the


debate is growing even wider. We must stick to the question of new towns.

Mr. Morris: I am guided by you, Mr. Deputy Speaker, but it is difficult to have a new town without a health service, though I suppose that that is what we now have in Northampton.

Mr. Deputy Speaker: The hon. Gentleman did not understand me too well. Perhaps it was my fault. We must discuss only what is in the Bill.

Mr. Morris: What my hon. Friend the Member for Horsham and Crawley has persistently maintained is that £1,000 million is, in anybody's money, a great deal of money. It is the job of the House to scrutinise that expenditure. There are enough resources to last until certainly the autumn and probably the whiter. We should welcome the Government's coming back with a Bill containing a smaller figure and some substantiation of how long it will last and to what effect it will be put.

11.17 p.m.

Mr. Guy Barnett: The hon. Member for Horsham and Crawley (Mr. Hordern) and several other Conservative Members referred to the £1,000 million as a large sum. I explained in my speech—I wonder whether certain Conservative Members were listening—that that sum concerned that expenditure which has already been approved in the public expenditure White Paper and that this is part of on-going programmes for which contracts have been let.

Mr. Raison: I seem to remember that there were certain difficulties about the public expenditure White Paper. I am not sure that it was approved by the House. I seem to remember that the Government ran into certain trouble. Even if the White Paper was approved, which I recall it was not, it is not the programme by which Supply is granted to the Government. The public expenditure White Paper is simply a statement of intentions over the next few years. For Supply, the Government must ask the House specifically for money. It is a constitutional abuse, a complete misreading of the situation, to say that the White Paper has granted sums of money to the Government.

Mr. Barnett: I did not argue that it had granted sums of money to the

Government. That is the purpose of the Bill. That is why a money Bill is being placed before the House. As Conservative Members have rightly argued, the Bill has provided occasions on which we have debated very fully, on Second Reading and Third Reading, the new towns programme. I have tried to help the House as far as I can with information that has been asked for.
The hon. Member for Northampton, South (Mr. Morris) mentioned the figure of £143 million. That is the housing figure for England only. The figure of £170 million is the figure for England, Wales and Scotland in the White Paper. That is what is covered by the Bill. As for the figure of £1,000 million that has been quoted, I made it clear that what we were talking about was capital expenditure at a rate of about £300 million a year. What the Government are asking the House for is not a subsidy and not a grant but the right for the National Loans Fund to lend money to the new towns corporations in the future in the light of their needs.

Mr. Hordern: Mr. Hordern rose—Ȕ

Mr. Barnett: I shall not give way. I have given way a great deal this evening.
We have given as much information as it is reasonable to give, or as any previous Government have given, about the new towns programme. The House must accept that the Government have put forward their proposals in the public expenditure White Paper, and the individual towns—Ȕ

Mr. Hordem: Mr. Hordem rose—Ȕ

Mr. Barnett: I shall not give way to the hon. Gentleman. I have listened to his speech, and I am now proposing—Ȕ

Mr. Hordern: Mr. Hordern rose—Ȕ

Mr. Deputy Speaker: Order. If the Minister does not desire to give way, he cannot be pressed to do so.

Mr. Barnett: I am trying to reply to the speeches that have been made, and the hour is late, as you have said, Mr. Deputy Speaker. I am doing my best to help hon. Members who have spoken, and my task is not made easier by constant interruptions. I gave way generously


when I opened the debate, and I am conscious that I speak again by permission of the House.

Mr. Hordern: The Minister said that the investment programme for the new towns will be £300 million in this year. He also said that the public expenditure White Paper figure was £170 million. He must, therefore, be saying that the new towns investment programme is almost double the public expenditure allowance for the purpose. That White Paper was produced only a few months ago. Are the Government now proposing to sanction twice as much investment in the new towns as appeared in the White Paper

Mr. Barnett: No. Clearly the hon. Gentleman has not been listening to me. When I mentioned the figure of £170 million, I was talking about housing alone. When I spoke of the £300 million, I was talking about office and factory developments and the other things which new towns need. We are talking about a capital expenditure on average of £300 million a year. The figure of £300 million appears in the capital expenditure proposals year by year, and on that basis, adding to it the revenue deficit of roughly £100 million a year, the total figure is made up.
I thought that I had already replied to the point about the length of time that this sum will last. The answer is that it will last between two and two and a half years. We cannot say precisely how long down to the last month, and it would be unwise for us to try to do so in the light of the factors, such as rates of interest, how fast the corporations will be able to get ahead with their tasks, and what the rate of inflation will be at the time. All these factors will inevitably determine the rate at which the new town corporations take up the tasks which we are laying on them.
The hon. Member for Horsham and Crawley repeated the argument about the apparent disparity between the large sum of money that we are making available to the new towns corporations and the money we are making available to the inner cities. He must learn not to compare unlike with unlike. To talk of the borrowing requirements of the corporations is one thing; to talk of the inner cities is another. A whole range of funds is avail-

able to the inner cities, as my right hon. Friend has repeatedly made clear.
First—and I think that the Opposition support this—the rate support grant has been geared generously to help inner cities, which have many social problems, and the Government's main programmes have been redesigned to show that they regard the problems of the inner cities as major problems. The Chancellor of the Exchequer's recent proposals for the construction industry are an example of that policy, and the larger grant proposed to the urban programmes are a major part of the Government's policy designed to help inner cities. It is not fair, therefore, to compare the amount made available in this way to the inner cities, which are annual figures, with those for the new towns, which are on a basis, as I have said, of two to two and a half years. The inner city figure is also one that we hope to increase in future years as economic circumstances improve.
It is suggested that somehow the Government are opposed to the investment of funds from private sources in the new town corporations. That is not true, as I have explained. I made it clear that Milton Keynes city centre is dependent upon £23 million of investment by the Post Office pension fund. The hon. Member for Bromsgrove and Redditch (Mr. Miller) said that the same was true of his town. There is a limited quantity of pension funds available.
I explained that the Government are not rigidly opposed to the possibility of the sale of certain assets. What I tried to do, since the Opposition are obviously interested in this matter, was to be as helpful as I could to the Opposition in explaining some of the difficulties which might be involved in view of the length of leases which had been let in the early development of new towns and the difficulties which might be involved in protecting the national interest, while naturally considering carefully, as we are doing, the proposal that certain assets possibly could be sold. We are considering that possibility in the light of the Expenditure Committee's Report and the Opposition's suggestions.
Local authorities have a perfect right to have aspirations to own industrial and commercial assets, and we are considering that also, whatever the hon. Member


for Horsham and Crawley may say. If we can find ways in which local authorities which have aspirations in that direction may become the owners of certain properties which are owned by new town corporations or by the New Towns Commission, we shall want to facilitate that.
A debate of this kind is of enormous value in airing issues which affect new towns, and I welcome the opportunity which this debate and the Second Reading debate have given us to debate new town matters in general. I wish that there were more such opportunities, and I agree heartily with the hon. Member for Ashford (Mr. Speed), who spoke on

Second Reading, about the need for plenty of opportunities to debate them. However, I cannot but comment on the total irresponsibility of the Opposition in voting against the Government on Second Reading—apparently they propose to do so again on Third Reading—because, were they to be successful, the consequence of their actions would be highly damaging to the new towns programme and to the degree of certainty that one wants to provide to the private interests in which they appear to be so interested.

Question put, That the Bill be now read the Third time.

The House divided: Ayes 146, Noes 118.

Division No. 155]
AYES
[11.28 p.m.


Archer, Rt Hon Peter
Garrett, W. E. (Wallsend)
Morris, Rt Hon J. (Aberavon)


Armstrong, Ernest
George, Bruce
Murray, Rt Hon Ronald King


Ashton, Joe
Gilbert, Dr John
Newens, Stanley


Atkins, Ronald (Preston N)
Gould, Bryan
Noble, Mike


Atkinson, Norman
Grant, George (Morpeth)
Ogden, Eric


Barnett, Guy (Greenwich)
Grocott, Bruce
Palmer, Arthur


Bates, Alf
Hamilton, James (Bothwell)
Park, George


Bean, R. E.
Harrison, Rt Hon Walter
Parry, Robert


Benn, Rt Hon Anthony Wedgwood
Hatton, Frank
Pavitt, Laurie


Bennett, Andrew (Stockport N)
Hooley, Frank
Penhaligon, David


Bishop, Rt Hon Edward
Horam, John
Prescott, John


Blenkinsop, Arthur
Howell, Rt Hon D. (B'ham, Sm H)
Roberts, Albert (Normanton)


Boyden, James (Bish Auck)
Howells, Geraint (Cardigan)
Robinson, Geoffrey


Callaghan, Jim (Middleton amp; P)
Hoyle, Doug (Nelson)
Roderick, Caerwyn


Canavan, Dennis
Huckfield, Les
Rodgers, George (Chorley)


Cartwright, John
Hughes, Mark (Durham)
Rooker, J. W.


Clemitson, Ivor
Hughes, Robert (Aberdeen N)
Rose, Paul B.


Cocks, Rt Hon Michael (Bristol S)
Hughes, Roy (Newport)
Ross, Stephen (Isle of Wight)


Cohen, Stanley
Hunter, Adam
Rowlands, Ted


Coleman, Donald
Irving, Rt Hon S. (Dartford)
Silkin, Rt Hon S. C. (Dulwich)


Colquhoun, Ms Maureen
Jackson, Miss Margaret (Lincoln)
Skinner, Dennis


Concannon, J. D.
Jeger, Mrs Lena
Small, William


Conian, Bernard
John, Brynmor
Smith, John (N Lanarkshire)


Cowans, Harry
Johnson, James (Hull West)
Snape, Peter


Cryer, Bob
Jones, Barry (East Flint)
Stallard, A. W.


Cunningham, G. (Islington S)
Kerr, Russell
Stott, Roger


Cunningham, Dr J. (Whiteh)
Kilroy-Silk, Robert
Swain, Thomas


Davidson, Arthur
Lamborn, Harry
Thomas, Dafydd (Merioneth)


Davies, Bryan (Enfield N)
Lamond, James
Thomas, Jeffrey (Abertillery)


Davis, Clinton (Hackney C)
Latham, Arthur (Paddington)
Thomas, Ron (Bristol NW)


Deakins, Eric
Lestor, Mist Joan (Eton amp; Slough)
Thorpe, Rt Hon Jeremy (N Devon)


Dean, Joseph (Leeds West)
Loyden, Eddie
Tinn, James


Dempsey, James
Lyon, Alexander (York)
Wainwright, Edwin (Dearne V)


Dormand, J. D.
Lyons, Edward (Bradford W)
Wainwright, Richard (Colne V)


Douglas-Wann, Bruce
McCartney, Hugh
Walker, Terry (Kingswood)


Duffy, A. E. P.
McDonald, Dr Oonagh
Ward, Michael


Dunnett, Jack
McElhone, Frank
Weetch, Ken


Dunwoody, Mrs Gwyneth
MacFarquhar, Roderick
Wellbeloved, James


Eadie, Alex
MacKenzie, Rt Hon Gregor
White, Frank R. (Bury)


Ellis, John (Brigg amp; Scun)
McMillan, Tom (Glasgow C)
Wigley, Dafydd


English, Michael
Madden, Max
Willey, Rt Hon Frederick


Ennals, David
Mahon, Simon
Williams, Rt Hon Alan (Swansea W)


Evans, Gwynfor (Carmarthen)
Mallalieu, J. P. W
Williams, Alan Lee (Hornch'ch)


Ewing, Harry (Stirling)
Marks, Kenneth
Wilson, Alexander (Hamilton)


Fernyhough, Rt Hon E.
Maynard, Miss Joan
Wise, Mrs Audrey


Flannery, Martin
Mendelson, John
Woodall, Alec


Fletcher, Ted (Darlington)
Millan, Rt Hon Bruce
Woof, Robert


Foot, Rt Hon Michael
Miller, Dr M. S. (E Kilbride)
TELLERS FOR THE AYES:


Fowler, Gerald (The Wrekin)
Mitchell, Austin Vernon (Grimsby)
Mr. Joseph Harper and


Freeson, Reginald
Molloy, William
Mr. Ted Graham.




NOES


Aitken, Jonathan
Boscawen, Hon Robert
Bulmer, Esmond


Atkins, Rt Hon H. (Spelthorne)
Bottomley, Peter
Burden, F. A.


Awdry, Daniel
Boyson, Dr Rhodes (Brent)
Butler, Adam (Bosworth)


Bell, Ronald
Brooke, Peter
Carlisle, Mark


Berry, Hon Anthony
Brotherton, Michael
Chalker, Mrs Lynda


Biffen, John
Buck, Antony
Clark, Alan (Plymouth, Sutton)




Clarke, Kenneth (Rushcliffe
Lawson, Nigel
Roberts, Michael (Cardiff NW)


Clegg, Walter
Le Merchant, Spencer
Roberts, Wyn (Conway)


Cooke, Robert (Bristol W)
Lester, Jim (Beeston)
Rossi, Hugh (Hornsey)


Cope, John
McCrindle, Robert
Sainsbury, Tim


Corrie, John
MacKay, Andrew James
Scott, Nicholas


Douglas-Hamilton, Lord James
McNair-Wilson, M. (Newbury)
Shelton, William (Streatham)


Drayson, Burnaby
McNair-Wilson, p. (New Forest)
Shepherd, Colin


Dykes, Hugh
Marshall, Michael (Arundel)
Shersby, Michael


Eden, Rt Hon Sir John
Mates, Michael
Silvester, Fred


Edwards, Nicholas (Pembroke)
Mather, Carol
Sims, Roger


Fairbairn, Nicholas
Mawby, Ray
Skeet, T. H. H.


Fisher, Sir Nigel
Maxwell-Hyslop, Robin
Smith, Timothy John (Ashfield)


Fowler, Norman (Sutton C'f'd)
Meyer, Sir Anthony
Spence, John


Gardner, Edward (S Fylde)
Miller, Hal (Bromsgrove)
Spicer, Jim (W Dorset)


Goodhart, Philip
Monro, Hector
Sproat, lain


Goodhew, Victor
Montgomery, Fergus
Stanbrook, Ivor


Gow, Ian (Eastbourne)
Morris, Michael (Northampton S)
Steen, Anthony (Wavertree)


Gower, Sir Raymond (Barry)
Morrison, Charles (Devizes)
Stokes, John


Grylis, Michael
Neave, Airey
Stradling Thomas, J.


Hannam, John
Nelson, Anthony
Taylor, Teddy (Cathcart)


Hastings, Stephen
Neubert, Michael
Tebbit, Norman


Hodgson, Robin
Newton, Tony
Temple-Morris, Peter


Hordern, Peter
Page, Rt Hon R. Graham (Crosby)
Thatcher, Rt Hon Margaret


Howell, Ralph (North Norfolk)
Page, Richard (Workington)
Townsend, Cyril D.


Hunt, David (Wirral)
Pattie, Geoffrey
van Straubenzee, W. R.


Hunt, John (Bromley)
Percival, Ian
Viggers, Peter


Hutchison, Michael Clark
Prior, Rt Hon James
Walder, David (Clitheroe)


Johnson Smith, G. (E Grinstead)
Pym, Rt Hon Francis
Weatherill, Bernard


Jopling, Michael
Raison, Timothy
Wells, John


Kaberry, Sir Donald
Renton, Rt Hon Sir D. (Hunts)
Winterton, Nicholas


Kimball, Marcus
Renton, Tim (Mid-Sussex)



Kitson, Sir Timothy
Rhodes James, R.
TELLERS FOR THE NOES:


Lamont, Norman
Rhys Williams, Sir Brandon
Mr. Peter Morrison and


Latham, Michael (Melton)
Ridley, Hon Nicholas
Sir George Young.


Lawrence, Ivan
Rippon, Rt Hon Geoffrey

Question accordingly agreed to.


Bill read the Third time and passed.

Orders of the Day — INCOME TAX (DOUBLE TAXATION RELIEF)

11.40 p.m.

The Minister of State, Treasury (Mr. Denzil Davies): I beg to move,
That an humble Address be presented to Her Majesty, praying that on the ratification by the Government of the United States of America of the Protocol set out in the Schedule to the Order entitled the Double Taxation Relief (Taxes on Income) (The United States of America) Order 1977, a draft of which was laid before this House on 16th May, an Order may be made in the form of that draft.
The Double Taxation Relief Order before the House today concerns a proposed second amending protocol to the new convention with the United States of America which, together with a first amending protocol, was approved by the House on 12th January. This further protocol provides two modifications to the convention: one of them is about the domicile position of certain American women, and the other is about the treatment of income paid out of trusts.
The domicile point arises in connection with the tax treatment in this country of investment income—arising outside the United Kingdom—of American women who are resident in this country and whose husbands have United Kingdom domicile. Under the Domicile and Matrimonial Proceedings Act 1973 a woman marrying on or after 1st January 1974 no longer automatically acquires her husband's domicile. She is treated as an independent person for these purposes, and this means that she can have a different domicile from that of her husband. For United Kingdom tax purposes the concept of domicile is a significant one because while individuals resident in the United Kingdom are generally liable to tax here on their world income, wherever arising, there is a different rule for people who, although they are resident here, are nevertheless not domiciled in the United Kingdom: their foreign source investment income is not taxable here if it is not remitted to this country.
In the debate in the House on 12th January on the Double Taxation Relief (United States of America) Orders—that is to say, the convention and the first amending protocol—hon. Members drew attention to the differing treatment which

could apply to American women married to men with a United Kingdom domicile dependent on whether or not their marriage took place before or after 1st January 1974. I undertook to look into this further to see whether anything might be done, within the confines of the convention, to bring American wives married before 1st January 1974 on to the same tax footing as those who married on or after that date.
I am glad to be able to tell the House that we have felt able to meet the concern of the House about this matter and the protocol provides that American women who before 1st January 1974 married men with United Kingdom domicile will be treated as if they married on 1st January 1974 when it comes to determining their domicile for United Kingdom tax purposes within the meaning of the Convention.
The second matter with which this protocol is concerned is the treatment under the convention of income paid out of trusts and is not concerned with the point about domicile. This primarily concerns income from discretionary trusts. Payments out of discretionary trusts have, since 1973, been treated for United Kingdom tax purposes as items of income in their own right. As such this income would fall within the scope of Article 22 of the convention, which provides a rule for eliminating double taxation on income which is not expressly dealt with in other articles of the convention. This would mean that the country of residence of the beneficiary would have sole taxing rights over income paid out of discretionary trusts, and this was not what was intended by either country when the convention was negotiated. What was intended was that the country of source of the income would have taxing rights also, and this is what the protocol provides. Double taxation will be avoided, as is normal in these cases, by the country of residence giving credit for tax charged by the country of source, and where doubts or difficulties arise about this the respective tax, authorities will be able to reach a solution under the mutual agreement procedure provided for by Article 25 of the convention.
I commend the terms of this protocol and I hope that the House will see fit to approve it.

11.45 p.m.

Mr. Peter Hordern: As the Minister said, this protocol is another interim stage towards ratification. The progress that the Minister has reported to the House, particularly in respect of American wives, is good. I congratulate the Minister on carrying out his undertaking and on not only looking at the position of American wives of United Kingdom citizens but actually doing something about it. While not all American wives will not be satisfied about this, their dissatisfaction will arise from the high levels of tax in this country rather than from particular distinctions artificially drawn against them—distinctions between those American wives who married before 1974 and lived in this country and those who came here and were married after 1974. There was no possible justification for that distinction. The House is grateful to the Minister for the progress that has been made in that direction.
However, I am left with a question in mind about the position of American males married to British wives. I take the example of a retired American male married to a British citizen here, who is domiciled in the United States but who is resident here. Will he be taxed on a remittance basis only—as is the case with American wives married to British subjects? If so, that is obviously acceptable. However, if that is not the case, it is strange that it is not included in the protocol, in which only wives are mentioned. Perhaps the Minister could clear that point up for us.
What is the position of the American woman who is working here, for example, for a United States corporation? As the House knows, the position of the American male working for an American corporation or any other business here is that if he stays here less than nine years only half of his income arising in this country is subject to tax at all and the rest only on a remittance basis. I take it that that is also the position of an American woman working for an American corporation, but I should be grateful if the Minister would tell the House whether it is so.
All these devices—and, indeed, the one that is currently being discussed in Committee about relief on overseas earnings—are simply a reflection of the crazy level

of tax in this country. None of these negotiations would have been necessary if tax here were not so high.
I am also grateful for what the Minister has said about Article 22 of the original convention and about discretionary trusts. I do not have any particular questions to ask him on that. I understand they are to be taxed under the relevant domestic law where the discretionary trust resides. However, what happens, for example, in the case of a discretionary trust which is resident in the Bahamas? Which of the taxing authorities—Britain or the United States—will be able to impose the tax?
Finally I turn to the most important problem that still arises in this convention and that is what one might briefly refer to as the California problem. We discussed this during our last debate on this double tax agreement. It arises because of the California tax which, I am told, is a unitary tax for the application of the California State franchise tax to subsidiaries of multinational companies located in that State. I understand that this means that the California authorities attempt to tax the subsidiaries of multinational companies on income that arises outside the State of California.
It is serious enough that this should be done in one State, but I understand that Oregon, Alaska, Illinois and Louisiana are moving in the same direction. Unless California's activities can be curtailed, as proposed in the convention, other States will follow suit. The California authorities have estimated that the prohibitory clause will entail a loss of revenue of $125 million for them, but this indicates only the severity of the tax that subsidiaries of United Kingdom multinational corporations will have to pay in California if the clause is not allowed to go through.
What stage has the process reached? I understand that the Senate External Affairs Committee is considering the matter, and any views that the Minister of State can bring to bear will be welcomed by the House. This is a matter of great importance. I do not think that the House could ratify an agreement that allowed one State to tax income arising from anywhere in the world for the purposes of that State's own revenue. If the precedent were accepted, many


other countries would be interested in such a form of tax.
I hope that this will not occur, that the American Senate will pass the convention as it stands and that we need not be troubled about it. The House will be anxious to learn whether the Minister has anything to report.

11.53 p.m.

Mr. Geoffrey Johnson Smith: I join my hon. Friend the Member for Horsham and Crawley (Mr. Hordem) in thanking the Minister for the small concession, Natural justice cried out that he should have given it, and it was monstrous that we should ever have thought that we could get away with it in the first place.
Can the Minister of State clarify two points for me? First, am I right in assuming that an American male who came here to work and was married to a British female would be taxed only on a remittance basis, where as an American female who is married to a British male would, unless she goes through the process of proving that she has or wishes to have another domicile, be taxed on the full amount of her income, whether she remits any or not?
I may be wrong, but it seems that the American female is not being treated equally with the American male. If that is so, can the Minister give any justification for that situation?
My second point concerns the Domicile and Matrimonial Proceedings Act 1973. I declare an interest as my wife is American. The Act says that after it comes into force the domicile of a married woman:
shall, instead of being the same as her husband's by virtue only of marriage, be ascertained by reference to the same factors as in the case of any other individual capable of having an independent domicile.
I assume that she then make the choice—"I am married to an Englishman but I decide that my domicile should remain in the United States". If that is the decision that she makes, I assume from the drafting of the Act that very few people would quarrel with it, and that for all intents and purposes she establishes by that simple declaration that her domicile remains in the United States.
However, Section 2 states that where a woman is married before 1974 and

had her husband's domicile by dependence, she is to be treated as retaining that domicile (as a domicile of choice, if it is not also her domicile of origin) unless and until it is changed by acquisition or revival of another domicile either on or after the coming into Force of this section.
I am not a lawyer but I assume that the section is stating that if a marriage took place before 1974 the wife is not in the same position as her sister who married after 1974. It seems that an American woman or a French woman, for example, has to prove in some way that her domicile is in some other place. That does not apply to someone married after 1974.
To avoid the full penal burden of taxation in this country, an American woman married before 1974 presumably has to go through the whole process to try to show that her domicile is elsewhere whereas her sister does not and the American male does not. There is no question of being taxed only on what she remits here. Such matters all hang on this domicile business. It does not matter if the money has been created exclusively by French people or American people. I restrict my references to Americans because my wife is an American.
Anyone in this country who was married before 1974 will find that every cent comes under British penal taxation if he cannot prove that his domicile is elsewhere. Leaving aside whether this country's taxation is penal, which is a matter of some dispute, although less and less of one between many of us on both sides of the House, the question of natural justice arises. I do not see what right a country has to tax the income of a person who does not bring income here, although I can see the right that we have to tax income which is brought here.
It seems that the concession that has been made tonight, although welcome, is modest and does not meet in toto the natural justice that I consider should be met.

11.58 p.m.

Mr. Denzil Davies: I deal with the three issues of substance that have been raised. The first is domicile and the effect of the Domicile and Matrimonial Proceedings Act 1973. Leaving aside double taxation treaties, the general law is that if a person is not domiciled in this country a worldwide income, as it were is not


taxable here unless remitted into the country. That is what I understand to be the general law.
Before the Divorce and Matrimonial Proceedings Act 1973 a married woman took the domicile of her husband. Irrespective of whether she could prove an independent domicile of her own, she automatically took her husband's domicile. If an American lady married a person domiciled in this country, she became of British domicile even though she might be able to prove that she was still domiciled in the United States. Having "acquired" British domicile before January 1974, her worldwide income was taxable in this country even though it was not remitted. It is towards that mischief that the protocol is being introduced.
The general law of domicile was that after 1st January 1974 if the same American lady were to marry the person domiciled in this country she would not automatically acquire British domicile although she might have British domicile. If she is married to somebody with British domicile living in this country, it may be decided on the facts of that case that she has given up United States domicile and has acquired domicile in this country. But, because of that Act, she is not automatically presumed as having acquired United Kingdom domicile. After 1st January 1974 she may be able to prove that, despite the fact that she is married to a person domiciled in this country and may be bringing up a family here, she is still domiciled in the United States of America. If she could show that, she would not, under our general tax law, pay United Kingdom tax until the income was remitted.
The object of the protocol is to bring American ladies who were married before the 1973 Act came into force into line with those who married after 1st January 1974. They will now be given the opportunity to prove that they are of United States domicile and to get the benefit of the remittance basis in relation to their income. I think that is a fair provision. It goes as far as we were asked to go. There is now no discrimination between one group and the other regarding the pre- and post-1st January 1974 situation.

Mr. Johnson Smith: It may be that this does not apply to the hon. Gentleman's

Department, because the Act was concerned with domicile, not taxation. However, I should have thought that the wording of the Act made it clear that there was no need for proof after 1974, whereas there was need for proof before 1974. That makes a difference, does it not?

Mr. Davies: No. I think that there is still need for proof. Domicile is a question of fact. The Act provided that there was no automatic presumption that because someone married a person of British domicile that person was also of British domicile. The person concerned still has to state what her domicile is. The Act cannot change that.
The hon. Member for Horsham and Crawley (Mr. Hordern) asked, as he did last time—and I did not answer satisfactorily—"What about this trust in the Bahamas?" I am not sure about the trust in the Bahamas. I understand that the protocol is based on where the income arises. If the income arises in the United Kingdom, the United Kingdom, as a result of what I hope the House will approve tonight, gets first bite, as it were, of the tax, but credit for that may be given to a United States' resident by the United States authorities. If the original convention were to stand, in that situation the United States authorities would have the primary taxing power and the United Kingdom authorities would have no power to tax at all. The object of the protocol is to apply what is generally considered to be the conventional rule, that the country in which the income arises has the first bite of tax and that the other country can give tax credit.

Mr. Hordern: Perhaps the Minister will let me know the answer to the question that I have put to him on two successive occasions about the trust in the Bahamas. I think that it would be of more general interest if I were to table a Question and he were to answer it later. Will he now deal with the position of the American male married to a British woman living here? What is his taxation basis for income remitted or not remitted here? Is it on all fours with that of the American woman?

Mr. Davies: Happily, we are not concerned tonight with the American male. If he is domiciled in the United States


although living in this country, this does not affect him. The protocol deals with the specific problem which arises partly as a result of the Domicile and Matrimonial Proceedings Act 1973.

Mr. Johnson Smith: I understand from the Minister that an American male need not prove his domicile. Is it correct that if he were domiciled in this country he would be taxed on his American income whether he remits it or not?

Mr. Davies: If he is domiciled in this country it is only fair that this country should claim his tax. But the expression "American male" is not applicable. If he is American he is an American citizen.
On the question of trusts, we are concerned with where the income arises and not with where the trust is situated. I was also questioned about the California unitary basis of taxation. I understand that the Senate foreign affairs committee will be considering the whole treaty in the middle of next month. These matters will be decided according to rules and procedures. What happens in the light of what is decided will be considered. We must await the outcome.

Question put and agreed to.

Resolved.

That an humble Address be presented to Her Majesty, praying that on the ratification by the Government of the United States of America of the Protocol set out in the Schedule to the Order entitled the Double Taxation Relief (Taxes on Income) (The United States of America) Order 1977, a draft of which was laid before this House on 16th May, an Order may be made in the form of that draft.

To be presented by Privy Councillors or Members of Her Majesty's Household.

Orders of the Day — NEWPORT (DEVELOPMENT AREA STATUS)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Frank R. White.]

12.6 a.m.

Mr. Roy Hughes: I welcome the opportunity to raise the need for development area status for Newport, even though the hour is late. My first and basic point is that the present development area boundaries are grossly unfair to Newport. Only a small area of Wales is not included in the development area

—the coastal resorts in North Wales and what one might call the Wye Valley in Gwent. One does not associate those areas with industrial development.
The area in South Gwent which is represented largely by Newport is the only industrial area that does not enjoy development area status.
The situation for Newport has deteriorated considerably in recent years. I raised the issue on 6th October 1974 when I was told by the then Minister of State that a close watch would be kept on the situation in Newport and that he and the Government were prepared to be flexible. He said:
If we become convinced of the need for further changes in the boundaries we shall not hesitate to take action."—[Official Report, 6th November 1974; Vol. 880, c. 1214.]
I am still waiting for this action for Newport. Newport Corporation, the Gwent County Council and the people of that county, particularly those who are unemployed, are still waiting for action.
I raised the matter on that occasion because of the announcement in August 1974 of Cardiff's inclusion in the development area. Over the years there has been considerable rivalry between these two towns, not least on the rugby field, but certainly in regard to industrial development. The announcement therefore came as a great shock to Newport, particularly since it is now encircled by towns and villages enjoying development area status—Cardiff on one side and the mining valleys of Gwent on the other.
What further evidence is needed to justify Newport's inclusion? Facts have been supplied over the months and years. It is on a par with Cardiff in terms of unemployment. There has been a wrangle over the dispersal of several thousand defence jobs from London. The Welsh Office has twisted and turned in every way to ensure that they went to Cardiff, although the staff were anxious to go to the admirable site of Tredegar Park in Newport. The matter is still in the melting-pot. Because of the recent public expenditure cuts, this costly project will probably not now go ahead, but if the staff's agreement at the time had been accepted, it might by now have been well under way.
Presumably the decision to give Cardiff development area status was based on the


supposed forthcoming closure of East Moors steel works, but that closure is now in the melting-pot again, at least until 1980. Cardiff has numerous advantages as a capital city, as its rateable values testify. Relatively, it is more prosperous than Newport. Under the present arrangements, therefore, Newport is at a distinct disadvantage.
On 14th April this year, the Government announced that Shotton in North Wales and Humberside were to be given development area status. Before the announcement, why was not Newport Corporation alerted to the fact that these matters were again in the melting-pot? New evidence could have been brought forward to advance Newport's case. But, again, it was a bolt from the blue.
There is a further dilemma in that the possible inclusion of Humberside could be highly detrimental to Newport. There is a certain project—an industrial development proposed by an international consortium that wants to establish a factory somewhere in the United Kingdom to make insulating material. It was apparently considering Newport. I have not been concerned with the intimate negotiations, but I have a letter dated 5th May from the chief executive of the Newport council—a man who is very experienced in these matters. He says:
The problems besetting Newport are well illustrated by the following case. Over the last two years an international consortium has been carrying out an intensive survey throughout the United Kingdom into setting up a factory to produce insulating materials. The factory would employ 350 people and occupy a 30-acre site. After long negotiations we were very optimistic that the consortium would settle on the Reevesland Industrial Estate at Newport. The major factor was its easy access to the motorway which would ensure that the company's vehicles could deliver its products to its major distributors in the South-East and West Midlands and return in the same day. However, because Humberside, an Intermediate area, like Newport until recently, has just been granted Development Area Status, the consortium is now likely to establish the proposed factory there.
This is the observation of the chief executive of the Newport council about a project that could be very advantageous to South Wales as a whole.
Many of these jobs would go to people in towns and villages such as Crosskeys, Blackwood and Abercarn, towns that are already in the development area, and

areas that have always been very loyal to Labour. Are they to be told that their people can remain on the dole because the Labour Government are not prepared to give development area status to the area where this factory could be sited?
I remind the Government that each day 20,000 people travel down from the valleys to work in Newport. Following local government reorganisation, the whole issue of industrial development no longer rests solely in the hands of the Newport council. It is partly the responsibility of the Gwent County Council. Mr. Gordon Probert, the county planning officer for that authority, has pointed out recently in a report that Gwent will require 30,000 new jobs in the next 15 years. So many of the unemployment problems of the mining valleys of Gwent could be solved by Newport, if it were given the right Government backing to which it is entitled.
People in Gwent are coming to the conclusion that everything is going West—in the Welsh sense. First, there was the announcement a few weeks ago that no less than £850 million was to be invested in the steel works at Port Talbot. The mind boggles at such a figure. Yet the unemployment in the town and in the surrounding area is roughly comparable with that of Newport, and has been over the years, as the employment statistics bear out. There is no justification for Port Talbot being in the development area and Newport not being in it.
Further along the coast, in Llanelli, the employment situation over the years has been superior to that in Newport. We have never received a straight answer when we have asked why Port Talbot and Llanelli are in the development area but Newport is not. There is no rhyme or reason to it.
Newport has had more than its share of industrial difficulties. We had the closure of the tube works, with a loss of 1,500 jobs; the closure of the British Aluminium factory, with a loss of 450 jobs; and the loss of the iron ore trade in the docks. Now there is a new list of smaller establishments on the closure list—half of the Whitehead works now owned by the British Steel Corporation; the pipe mill at Llanwem; Westing-house; Connor and Davies; and the bus depot, with a loss of 60 jobs to the town.
Newport has the motorway, but it has not prevented closures over the years. As to expenditure on major road projects in Wales, the development along the coast to West Wales—the M4—has scooped the pool. I have the official document "Roads and Transport Document, Wales", which lists schemes costing over £250,000. I do not see any mention of Gwent in the whole of this sheet. The vast bulk of the expenditure is going on the M4 extension, but even in the trunk road schemes there is no mention of Newport, let alone Gwent as a whole.
Ebbw Vale is suffering thousands of redundancies. Roads are badly needed up there. Road works at Aberbeeg, the Risca bypass and the Cwmbran bypass should receive high priority, yet Gwent is well back in the queue.
There has even been an allegation recently that Gwent County Council has had to take money earmarked as a subsidy for public transport to keep up road maintenance and perhaps some minor new works. If we had a Welsh Assembly, the Gwent representatives would have something to say about the situation. I cannot believe that in these matters the Welsh Office is giving Newport and Gwent the backing we should be receiving. After all, 20 per cent, of the people of Wales live in Gwent. South Wales should be treated as a single industrial entity. It is grossly unfair to isolate Newport, the only industrial part of South Wales not in the development area.
I repeat that all the evidence points to the fact that Newport is being discriminated against and has been discriminated against in recent years. This in turn is detrimental to job opportunities, not only for Newport but for the valleys of Gwent as well. The vast bulk of investment, both industrial and for roads, is going West. It is time that the whole of Gwent woke up and realised what was happening.
The Minister is a fair-minded man. All that we are asking for is a bit of fair play. Let us have a bit of Welsh chwara-teg.

12.25 a.m.

The Minister of State, Department of Industry (Mr. Alan Williams): First, I thank my hon. Friend the Member for Newport (Mr. Hughes) for giving us the opportunity for this discussion. I know

from looking at Hansard how vigorously he has fought over the years for his constituency. The issue to which he has returned tonight is one about which he genuinely feels very strongly and one that he puts forward sincerely.
I should like to make certain basic points to my hon. Friend. The first thing to remember about the objective of regional policy is that it is not intended to deal with the unemployment caused by recession. It is intended to deal with underlying structural unemployment. One of the difficulties that have confronted the Government when we have had to consider our scheduling of areas has been to assess how far the needs and difficulties of the areas in the worst economic recession the Western world has known since the war are because of a deep-seated underlying malaise and how far they are a reflection of what we hope is a temporary recession which will gradually abate and then leave the areas with far more normal levels of unemployment. That is the first consideration—whether it is a long-standing structural difficulty from which an area suffers.
A further point that we must bear in mind is that assisted areas are already extensive, as my hon. Friend has intimated in relation to Wales. Forty-three per cent, of all employees and 65 per cent, of land area already come within assisted areas. About half the employees in assisted areas are in the special development and development areas. I know that my hon. Friend will accept, even if not in relation to his own constituency, that the more one extends the boundaries without compensatory cutback of the boundaries elsewhere, the more one dilutes the assistance that is going to areas of need. Therefore, in considering any extension of boundaries one must bear in mind its impact on other areas which are already scheduled and which may have greater need.
I fully appreciate the point which my hon. Friend rightly made about Newport as a focal point in commuting terms. Equally, as he and I are very familiar with the Gwent valleys, for reasons of family background, I know that he will accept the counter-point that can be made. He said that we should give the status to Newport because Newport would then provide jobs for the valleys. It could well be that those representing


the valley constituencies would say in response "Give this status to Newport and it diminishes the opportunities of the valley communities to attract the industry that they need within their own boundaries". It is an argument which can be made either way.
My hon. Friend asked why Newport was not alerted to the fact that the recent changes were being contemplated, so that it had the opportunity to present new information. I assure my hon. Friend that no authorities were specially alerted. So many have applied for development area status over the years that it would have been administratively impossible to cope with the bus-loads of deputations that would have beaten a track to the Department's door, only to repeat points that were known to the Government anyway.
Furthermore, we had indicated on more than one occasion that regional policy was under continuous review. That is still so. I am to see two deputations tomorrow, and I saw several last week from authorities that feel they should be upgraded. My hon. Friend is welcome to bring a deputation should he wish. He can then make his case in more detail than is possible in 15 minutes.
My hon. Friend asked, "Why not do some downgrading in Wales?" That is for him to assess. I looked at the employment situation there and felt that, in present circumstances, I would not be justified in any downgrading. But I did downgrade certain areas in, for example, North Yorkshire and Scotland.
The fact that certain areas were not included in the recent announcement and were invited separately to submit representations did not mean that they were not considered. Officials of various Departments carry out a detailed analysis of the situation in all areas which conceivably could merit a change in designation, be it a change to a higher or to a lower grading. All the areas which were in contention were looked at and considered even before the matter reached Ministers.
When making changes, we have to bear in mind statutory requirements. Under the legal situation, the Secretary of State has to have regard to all the circumstances, actual and expected, in-

cluding the state of employment and unemployment. Unemployment is a factor, but it is not the sole factor. Present unemployment is a factor, but possible trends in the future also have to be taken into account.
I want to draw attention to certain favourable things which have happened in my hon. Friend's constituency, be cause, rightly, he listed certain disadvantages from which it has suffered. We have to bear in mind, to begin with, that the move by the Government towards greater selectivity in the use of support to industry is a favourable trend in Newport. Under our industry schemes, for example, Newport is eligible for the same level of grant as in other development areas. Six firms which have received grants under the ferrous foundry scheme have received them on the same basis as firms in development areas.
In addition, Newport still remains eligible for regional development grants for building for advanced factories, and for regional selective assistance, and the Welsh Development Agency and the European Regional Development Fund are also sources available to Newport.
Under Section 7 powers—regional selective assistance—offers valued at £1,250,000 have been made for 11 projects in Newport, involving a total expenditure of £28 million, and these are expected to create or safeguard 1,600 jobs. A Government advance factory has been built at Rogerstone and has been provisionally allocated. We hope that the jobs will arise from it within the next two years. The Welsh Development Agency in March announced its first major venture in investment, a loan of £150,000 to N. Mole  Sons Limited, the tool-making company, to enable it to purchase new plant and to provide working capital. Furthermore, the WDA is proposing to undertake two land reclamation schemes in the constituency.
The European Regional Development Fund has supported three infrastructure projects, two in relation to the provision of industrial estates and the third in relation to the supply of electricity to industry. Under Section 8, the national scheme for financial support, three offers totalling £79,000 have been made to projects in Newport under the ferrous foundry scheme. Since 1975, six industrial development certificates have been


approved for Newport, giving a total of about 650,000 square feet of extra factory space.
Our estimate is that approximately 1,600 manufacturing jobs are in the pipeline for Newport in addition to the jobs which Newport will obtain as a result of Government dispersal. My hon. Friend will accept that, although St. Mellons may not be in Newport, it is accessible as an employment centre to people from Newport.

Mr. John Stradling Thomas: It is the distortion which disturbs us. I support the hon. Member for Newport (Mr. Hughes) on this point. St. Mellons and Rogerstone are in our constituencies; we have a common interest.

It is difficult for the Government to resolve the dilemma. That is the burden of the speech of the hon. Member for Newport. I support what he has said.

Mr. Williams: For many years people have been worried that the communications links in South Wales have created a distortion towards this corner of South Wales——

The Question having been proposed after Ten o'clock on Monday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-four minutes to One o'clock.